Wednesday, July 13, 2011

Regarding trading stocks online?

No, there are no withholdings in your brokerage account so you have to pay the taxes out of pocket when you file your income tax report. All countries tax on residence, the US taxes on citizenship then residence so living abroad does not exempt a US citizen from US taxes although there is an exemption on a certain amount of income if you've been out of the country long enough and an alternative minimum tax. Most countries tax your world income with the exception being the UK which taxes on domestic income which is why London is the favourite home for millionaires around the world. Countries will have tax agreements with each other to avoid double taxation. If you are not living in the US but are investing through a US broker, you will have to apply for a US SSN to identify you to the IRS, you will have to file a non-resident alien income tax report which will likely result in at least 15% of your gains being with-held for taxes, and you will also have to report your income on a tax report for the country of your residence and or citizenship and may have to pay taxes there as well, there may be agreements between the countries involved such that you may be able to deduct what you've paid in taxes for one country from the taxes you owe to the other country and vice versa. In general, you'd make your life much easier if you just went with a broker in your own country.

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