Taxation of Nonresident Aliens Investors in U.S. Stocks?

Learn about how nonresident alien investors are taxed on their U.S. stock holdings.
Nonresident aliens are individuals who are not U.S. citizens or permanent residents (green card holders) and who do not meet the substantial presence test.
In this video you will learn about:
-- Who a nonresident alien is
-- Taxation of capital gains upon sale
-- How dividends are taxed
-- U.S. gift tax on gifts of U.S. stocks
-- U.S. estate tax in the event you die owning U.S. stocks
-- Taxation of transfers of U.S. stocks to a company or trust
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Hi! I am Jimmy Sexton, LL.M. - Founder & CEO of Esquire Group. I founded Esquire Group with the objective of helping and inspiring wealthy families, investors, entrepreneurs, and high-level executives obtain and gain control over and protect their wealth, via strategic wealth planning.
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-------------------------------------------------DISCLAIMER-------------------------------------------------------
This video is prepared for educational purposes only. This video is not legal, tax or any other type of advice. Each individuals’ circumstances are different, you should seek legal and/or tax advice to address your specific situation and any questions you may have.

[@sgill4833]

This is amazing. So basically trading stocks there's no tax.

[@esquiregroup]

No income tax. There is, however, estate tax if you die owning the stocks and your portfolio has a value of more than $60k.

[@corblimey8729]

Wow great information. Thank you so much!

[@henryterranauta9100]

Good stuff and very explicit 👍🏼👍🏼👍🏼👍🏼👍🏼👍🏼👍🏼

[@esquiregroup]

Thanks 👍

[@julianpeller6619]

Thank you very much! I love your content and I have just subscribed. I am a nonresident with a W8-BEN using TDA. I have stocks, and TDA is withholding my taxes for dividends. I would like to buy bonds, but I fear it would make me file a form with the IRS. Is TDA acting as a withholding agent for bond taxes similar to what it's doing with dividends? What is the taxation for nonresidents regarding bonds?

[@esquiregroup]

I am happy you like the content. Owning bonds shouldn't trigger a US tax filing requirement. If there is any withholding, TDA should do that as withholding agent just like with dividends.

[@xoxoDeki]

Hey Julian! I'm also a non resident alien and I have not been filing taxes with the IRS ever since I began investing in stocks. My brokerage firm is also witholding taxes from my dividends. I recently found out that I am supposed to be filing the 1040 NR form every year. Did you have to file that as well?

[@eduardosoares2484]

Congrats for the video. I'm not a US citizen or resident. If i own a non-US-company who owns 100% of a single-owner-US-LLC and this american company buy and hold stocks and then periodically receive DIVIDENDS from these shares, WILL THE COMPANY BE TAXED IN THE US?

[@esquiregroup]

The best way to get an answer to this question would be to set a consultation with me. You can email us at [e-mail] to set up a consultation.

[@Lav291]

Hi, I am a Canadian. I sold all my US PTP shares in 2023. I have just learned from my broker that I have to file non-resident US tax return. What forms do I have to file ? Thanks for the video.

[@esquiregroup]

A nonresident individual income tax return is Form 1040NR.

[@xoxoDeki]

Thanks for the helpful content! Just to reconfirm, since I am a non resident alien I do not have to file taxes every year right? My brokerage firm is witholding 30% tax on my dividends. For the last 8 years I have not been filing taxes but have been buying and selling stocks. Recently found out that I should be filing the 1040-NR form but your video says I am not required to file taxes. Would really appreciate it if you could clarify that for me!

[@esquiregroup]

Generally you would not be required to file US taxes if full withholding was done.

[@xoxoDeki]

@@esquiregroup Thanks for responding! appreciate it 😊

[@nicholasstarpoli6179]

As a nonresident Alien myself I find it extremely difficult to get accepted to use platforms to trade (futures, options, forex) because they continue to say that I need to provide citizenship in at least one country. Wondering how I can explain how this is not needed

[@esquiregroup]

This isn’t really a tax question. That said, brokerage firms can set their own requirements for what they require for an account to be opened.

[@attilanotatilla]

What about REITS? How are they taxed for non-resident aliens?

[@esquiregroup]

I would need more info to say definitively. There are many consideration, including whether there is a tax treaty with your home country. I’d be happy to advise you on this matter. You can setup a consultation with me by emailing us at [e-mail]. Thanks!

[@attilanotatilla]

@@esquiregroup IBKR already said it so all good , solved it.

[@TBasianeyes]

What about options premiums? They are classified as capital gains not income so I assume that they are taxed at 0%.

[@esquiregroup]

I am not sure on that one off the top of my head. If you would like to hire us to research the matter and give you a definitive answer, please email us at [e-mail] to set up a consultation. Thanks!

[@mgeorgy9105]

I'm in Australia and my question is in relation to selling a PTP (which was purchased by my company) There is 10% a withholding for selling a PTP as it's an Australian company (I understand that) Australia has a free trade agreement with the US, which would mean the 10% withheld would be a tax credit. Would I use that withheld 10% for my Australian company tax return? or would I also still need to file a K-1 tax form (for my company)?

[@esquiregroup]

Thank you for your question. I would need a bit more info to be able to answer your question. I would be happy to assist. Please email us at [e-mail] to set up a consultation with me.

[@rafaelcastilhotessecini9360]

If I am an international student in the U.S (F-1 visa) and invest through Robinhood, will I be able to keep investing through Rh even after I graduate and move back to my home country?

[@esquiregroup]

That is not a tax question but a question for Robinhood.

[@rafaelcastilhotessecini9360]

But technically, disregarding the brokerage account I use, I should be good to continue investing in the u.s since I have my SSN and could fill taxes as a nonresident alien, correct?

[@esquiregroup]

Yes, you should be able to continue to trade U.S. stocks. Whether or not you need to file taxes depends on the type of income you receive from your stock ownership and trading.

[@quantcooker8549]

When you say portfolio assets, do it include the cash sitting in the brokerage account? are these cash subjected to estate tax too? Thanks a lot!

[@esquiregroup]

Cash in a US bank account is generally not subject to US estate tax.

[@investorslifepk]

What about brokers like IBKR who are registered in US. I heard somewhere it will be counted as assets?

[@kosinus_2292]

I am a non-US resident and have a brokerage account in the USA. I want to donate (transfer) funds from iShares to the US market and Worldwide to my son. He is also a non-resident of the United States, he has an account. Please answer a few of my questions: 1) Is it not possible to give papers between personal accounts? Can I just create a joint account with my son and make a transfer there? 2) There is no gift tax in my country. Will I have to pay tax if I make a transfer to a joint account? A non-US resident may not pay tax if you donate shares of US companies. Does this apply correctly to my funds? 3) Do the US tax authorities have questions after inheriting funds in a joint account? Thanks a lot!

[@esquiregroup]

Thank you for your questions. To get an answer to your questions, you'd need to set up a consultation with me. You can do so by emailing us at [e-mail]

[@user-ii5de3wp4w]

1:35 I am an international student (F1 visa holder) and have been here in the US for more than 183 days. Would that mean that I am subject to being taxed as a US Citizen?

[@esquiregroup]

Generally people on student visas are exempted from being treated as US persons for tax purposes, but it is facts dependent. If you would like to get definitive advice on the matter, please set up a consultation with me emailing [e-mail].

[@cperota2234]

How much you charge one hour consultation? I am looking to setup an llc or other smilar structure that allow to trade us stock and include in that structure closed famil member members when I pass away?

[@esquiregroup]

Please email us at [e-mail] to get list of our consultation options and prices.

[@Flandria55]

Very interesting video . What jurisdiction (non US) would be suitable to set up a company that will be accepted by the US broker and permits the opening of a bank account??

[@esquiregroup]

I generally recommend using a UAE company in DIFC or RAKICC, but a company from anywhere can work, however, you should check the tax consequences of setting up such a company with your country of residence and the country in which you set it up. Generally, you can get a brokerage account with a foreign broker that will allow you trade US stocks, but some US brokers accept accounts from foreign companies. I would check which US brokers accept foreign company accounts. If you like to get advice on this, contact us to setup a consultation at [e-mail]

[@ASITL]

what about long term capital gains from gold etf like gldm?

[@esquiregroup]

There should not be any US capital gains taxes due.

[@jjun2891]

What about PTP (public traded partnership)? Specifically 1446f, is there any way around this or at least get some tax returns as the 10% on sale amount is brutal

[@esquiregroup]

I believe the 10% withholding tax is merely a withholding against actual tax owed and that you can file a US tax return and get any overwithheld refunded. I would need to do some research to answer you question definitively, however. I am happy to do so if you'd like to schedule a consultation with me. You can do so by emailing us at [e-mail]. Thanks!

[@p.c.h.6721]

Did I hear you say some double tax treaties allow you to reduce the withholding rate from 30%, to 15%, 10% and even 0%? I’m aware of the treaties with countries where the US withholding rate is 15% and 10%, such as Mexico, but I’m not aware of any double tax treaty the US has with a foreign country where the withholding rate is 0%, could you please explain? Thanks in advance.

[@esquiregroup]

The 0% rate generally applies to corporations.

[@rifatrashidadnan7613]

Super confused about US LLC formation as NON US Resident My question is what's the benefit of forming a llc for non US residents for Amazon. I am from Bangladesh which has a tax treaty. When I put my own country's tax id the default tax withholding becomes 10% for royalties earned from amazon us market. My question is, if I even form a single member US LLC then after getting EIN or even ITIN, will amazon make the default tax withholding 0%? I guess no. It will be 10% as I reside in Bangladesh though my LLC will have US Address and phone number. Please correct me if I am wrong here. In this case, what's the benefit I get if I form a US llc? Just share your ideas please.

[@esquiregroup]

That question is a bit complex. If the LLC only has one owner, then Amazon will not reduce the withholding as the LLC is disregarded for tax purposes. If, however, the LLC has more than one owner then it will reduce the withholding but the income will be subject to tax. You are likely better off leaving it as is. That said, I can't formally advise on the matter without more info. If you'd like to setup a consultation to discuss, you can do so by emailing us at [e-mail].

[@rifatrashidadnan7613]

@@esquiregroup Thanks a lot. So did you want to mean multi member LLC is good option as that is not treated as individual at Amazon and they will treat it as business? I will email you. I talked to a friend. He told me. CCorp is US person. Ccorp makes it 0 (it means tax withholding) And c corp you can reduce the taxes to 3 to 4%. When I told him about high tax he told me We can show expenses like you can transfer as management fees and reduce to 3 to 5 % tax on sales.

[@esquiregroup]

This is a complex issue. Please email us at [e-mail] to setup a consultation.

[@Hammer_Plays]

A non-US citizen residing outside USA and providing bookkeeping/consulting services remotely to a US based company as a freelancer, is it a US source income? Is any withholding tax applicable in this case? Thank you for your help!

[@esquiregroup]

This would generally not be considered US source income and there should be no withholding tax.

[@andygriesbach1238]

If I form a trust and move my US stocks to the trust, Can I spend as much time as I would like visiting the US without tax consequences?

[@esquiregroup]

Possibly. Assuming you are currently a nonresident alien, the trust would need to be formed at least 5 years before you became U.S. tax resident, and you couldn't do the trading from within the U.S. Your trustee should do the trading from outside the U.S.

[@AmjadSadek]

is that mean REITs will consider (real property holding corporation)? and will apply for capital gain Tax?

[@esquiregroup]

Generally capital gains on REITs are subject to US tax.

[@claudiovallone9217]

​@@esquiregroupeven if you are a non resident?

[@RammsteinFan1100]

If i sell reit with realized loss do i need to file tax return? Thank You a lot

[@gagaga6756]

If I am a US resident, but not a citizen, does the estate tax on stocks applies to me?

[@esquiregroup]

That is a complex question that depends on your domicile rather than your residence. If you would like help determining your potential US estate tax liability, please schedule a consultation with me by emailing me at [e-mail]

[@petroamit]

Can I use nomimee for my US stocks so that proceeds can move to nominee in case of death? Will the proceeds be taxable in that case?

[@esquiregroup]

This will not help as a you are still the beneficial owner of the stock owned through the nominee.

[@kritikbyanju2543]

Hello i am from Nepal. Nepal doesn't have tax treaty with USA. So i cant file the W8 form. I basically want to open a brokerage account with Interactive brokers using Wyoming llc. Main goal is trading futures market to make profits. No dividends just pure capital gains or profits. So what will be the solution as theres no tax treaty between Nepal and US and i can't file the W8 form as it says there should be tax treaty with US.

[@esquiregroup]

You may have a misunderstanding of the law. It would be best to schedule a consultation with me to discuss this further and I can amasser any questions you may have. You can set up a consultation by emailing us [e-mail]

[@kritikbyanju2543]

@@esquiregroup sure

[@michayng4105]

Im NOT US citizen. How to reduce/ eliminate income tax on dividend ? 30% is a large amount.

[@esquiregroup]

This is generally only possible if there is a tax treaty between your country of residence and the US.

[@rocknroutes]

Hi, I got a foreign individual acct in TDA. My brother is a US citizen, he has an individual account on TDA as well. He would like to give me 40k in stocks as gift. If that taxable? Who pays for that tax?

[@esquiregroup]

Your brother could be liable for US gift tax but I would need more information to give a definitive answer. I’d be happy to advise you on the matter. You can setup a consultation to speak with me by emailing [e-mail]. Thanks!

[@mgrss777]

What about gains in options ?

[@esquiregroup]

This can be a quite tricky and depends on how the option was acquired. I would need more information to advise on this properly. You can schedule a consultation with us by emailing us at [e-mail]. Thanks!

[@GerardoOviedo-id7wo]

Hello. Do I need to file a 1040NR if I am a nonresident trader with a US brokerage account? Last year I recieved dividends and interests (certificate of deposits) payments

[@esquiregroup]

Depends on if proper withholding was done. If yes, then no return should be required. If no, then a 1040NR would be required to pay the tax.

[@Basic-Reviews]

@@esquiregroup100%.

[@attilanotatilla]

How can you optimize down to ZERO tax paid on dividend? (BTW sent you an email)

[@esquiregroup]

It is generally possible to optimize down to zero tax on a dividend. That said, I would be happy to help you optimize as much as possible. You can setup a consultation with me by emailing us at [e-mail]. Thanks!