Timeline for Traditional IRA distributions taxation as non-resident
Current License: CC BY-SA 4.0
12 events
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| Jun 14, 2020 at 3:34 | comment | added | user2371765 | Also, please see "situation 2" in timesofindia.indiatimes.com/nri/other-news/… in which they talk about structuring the payments as a private pension so that Indian tax is the only tax paid as per Article 20 of the India-US tax treaty irs.gov/pub/irs-trty/india.pdf. | |
| Jun 14, 2020 at 3:31 | comment | added | user2371765 | Yes, It is a fine point. Thank you. I read the paragraph that you have quoted above a few times and realized that eventually I would end up paying higher of the two taxes imposed on the US income. If US charges higher than India then I pay nothing to India on that amount, and if India were to charge higher then I pay to India the excess of that amount over the amount that I will have paid to the USA. | |
| Jun 13, 2020 at 23:53 | comment | added | Dilip Sarwate | Distinguish between tax money that is withheld and tax money that is due (and duly paid). If you have had too much money withheld, you will get a refund from the IRS of the excess withholding. As far as India is concerned, you get a credit against your Indian income tax due up to the amount that India would have required you to pay tax on that foreign income. If you paid 30% US tax and India would have required you to pay only 20% on that foreign income, you don't need to pay that 20% due to India; you don't get a reduction of other taxes due to India for the remaining 10% paid to US | |
| Jun 13, 2020 at 18:40 | vote | accept | user2371765 | ||
| Jun 13, 2020 at 18:39 | comment | added | user2371765 | According to irs.gov/businesses/international-businesses/… there is an India-USA tax treaty. | |
| Jun 4, 2020 at 19:59 | history | edited | Dilip Sarwate | CC BY-SA 4.0 |
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| Jun 4, 2020 at 19:52 | history | edited | Dilip Sarwate | CC BY-SA 4.0 |
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| Jun 4, 2020 at 15:37 | comment | added | user2371765 | I remarked that 30% would be more than the taxes in India to indicate that I am not sure what tax credit I will receive. I will surely not get money back from India. | |
| Jun 4, 2020 at 15:30 | comment | added | user2371765 | Pub 515 Withholding on Specific Income / Pensions, Annuities and Alimony (code 15) which is the instructions for the payor says: For purposes of Chapter 3 withholding, in the absence of a treaty exemption, you must withhold at the statutory rate of 30% on the entire distribution that is from sources within the United States. You may, however, apply withholding at graduated rates to the part of a distribution that arises from the performance of services in the United States after December 31, 1986. | |
| Jun 4, 2020 at 15:24 | comment | added | user2371765 | Also, the money will be credited to a US account which I plan to keep open. | |
| Jun 4, 2020 at 15:23 | comment | added | user2371765 | 30% tax would most likely be much more than the tax calculated on the same amount in India. Also, 1040 NR line 16b is for taxable IRA distributions on which the tax is calculated in a graduated manner according to 1040 NR instructions. Why do you say a flat 30% tax will be withheld? What if I convert to Roth? Will Roth be taxable again in India? | |
| Jun 4, 2020 at 15:06 | history | answered | Dilip Sarwate | CC BY-SA 4.0 |