Taxes on investments in US stock market

[CrossBones]

Hi

If i setup an online tradining acount such as through Maybank locally in Thailand or one of the international ones, and I buy stocks in the USA - how am i taxed in Thailand.

 

I am NOT american. I am Thailand tax resident and have a Thai tax ID.

 

SO

 

1) Tax on dividends from stocks - how does that work

2) Tax on profits from selling stocks - how does that work?

 

I assume 1) is taxable in Thailand and 2) is not taxable 

 

OR?

[sanmyintmaung]

Both 1 and 2 are taxable in Thailand only if you bring the income back into Thailand in the same year it's earned.

No tax if you keep the dividends or profits in foreign brokerage account and bring them back into Thailand one year after it's earned.

[CrossBones]

I see. Well dividends are not paid to you in the same year that they are earnt right.  2020 dividends are sent in 2021

[sanmyintmaung]

8 hours ago, CrossBones said:

I see. Well dividends are not paid to you in the same year that they are earnt right.  2020 dividends are sent in 2021

There are stocks that pay dividend quarterly.

[Chivas]

I own "Reality income" an American ETF which pays Dividends monthly. I get a 15% withholding tax on monthly payouts. I'm British and resident in UK

Edited August 31, 2020 by Chivas

[topt]

On 8/30/2020 at 3:25 AM, CrossBones said:

I see. Well dividends are not paid to you in the same year that they are earnt right.  2020 dividends are sent in 2021

It is when you earn them - IE when you get paid. Nothing to do with when the business generates the income.

[Thailand J]

On 8/29/2020 at 8:05 PM, CrossBones said:

1) Tax on dividends from stocks - how does that work

Your broker will deduct your tax obligations from the dividends.

Your broker is also supposed to send you a yearly statement, Form 1042 showing total dividends and also the total withholdings.

If the withholding is correct , you dont have to do anything. If not you will need to get a tax identification number from the IRS and file Form 1040NR for a refund or to make up the difference. Schwab International and Interative Brokers accounts come with a US based bank account. The balance in the bank account is the cash you have in the brokerage account. YOu can use the bank's routing number and account number on Form 1040NR for a refund. Easy. You may be able to pay the IRS from the bank account if you owe.

On 8/29/2020 at 8:05 PM, CrossBones said:

2) Tax on profits from selling stocks - how does that work?

As your capital gain is tax free, you will get any sales proceed in full from the broker. Lucky you.

 

 

Edited September 1, 2020 by Thailand J

[Thailand J]

6 hours ago, Thailand J said:

your broker is also supposed to send you a yearly statement, Form 1042 showing total dividends and also the total withholdings.

oops not Form 1042, should be Form 1042S which you need when you file Form 1040NR.

[sanmyintmaung]

9 hours ago, Thailand J said:

Posted 9 hours ago (edited)

On 8/29/2020 at 8:05 PM, CrossBones said:

1) Tax on dividends from stocks - how does that work

Your broker will deduct your tax obligations from the dividends.

Your broker is also supposed to send you a yearly statement, Form 1042 showing total dividends and also the total withholdings.

If the withholding is correct , you dont have to do anything. If not you will need to get a tax identification number from the IRS and file Form 1040NR for a refund or to make up the difference. Schwab International and Interative Brokers accounts come with a US based bank account. The balance in the bank account is the cash you have in the brokerage account. YOu can use the bank's routing number and account number on Form 1040NR for a refund. Easy. You may be able to pay the IRS from the bank account if you owe.

On 8/29/2020 at 8:05 PM, CrossBones said:

2) Tax on profits from selling stocks - how does that work?

As your capital gain is tax free, you will get any sales proceed in full from the broker. Lucky you.

 

 I believe OP question is for tax in Thailand for the earnings in foreign stocks held oversea.

On 8/29/2020 at 8:05 PM, CrossBones said:

I assume 1) is taxable in Thailand and 2) is not taxable 

Tax deductions by foreign brokers are for the IRS (US tax authority) so unless double taxation agreements between US and Thailand is in place, OP may still need to pay tax in Thailand. One way to avoid paying tax in Thailand is to keep the dividends or profits in foreign brokerage account and bring them back into Thailand one year after it's earned.

[JimGant]

On 9/2/2020 at 9:26 AM, sanmyintmaung said:

One way to avoid paying tax in Thailand is to keep the dividends or profits in foreign brokerage account and bring them back into Thailand one year after it's earned.

Actually, in the next calendar year. Dividends paid to you on 31 Dec can be brought into Thailand the next day, 1 Jan, tax free. This quirk is advertised by all the big brokerage companies -- but interestingly the exact code underwriting this cannot be located. But, suffice to believe the brokerage firms have sufficient grounds to advertise this tax saving ploy.

[CrossBones]

So the US broker holds 15 percent or 30 percent? I thought it was  30 percent but someone here just said 15 percent

[sanmyintmaung]

6 hours ago, CrossBones said:

So the US broker holds 15 percent or 30 percent? I thought it was  30 percent but someone here just said 15 percent

Nonresident aliens are subject to a dividend tax rate of 30% on dividends paid out by U.S. companies. The 30% tax rate can also be lower depending on the treaty between your home country and the U.S.

Example, due to the double tax agreement between the US and UK, the amount of withholding tax on dividend can be reduced to 15% for UK citizens holding US stocks.

Edited September 4, 2020 by sanmyintmaung

[JimGant]

6 hours ago, CrossBones said:

So the US broker holds 15 percent or 30 percent? I thought it was  30 percent but someone here just said 15 percent

Like most US tax treaties, the US-Thai tax treaty reduces withholding at source for dividends from 30% to 15%. You need to file a W-8BEN IRS form with your broker to bring to his attention that you're subject to this tax treaty.

https://www.irs.gov/forms-pubs/about-form-w-8-ben