With our US based stock trading or IRA, if we buy and sell foreign based stock listed in NYSE such as BABA, BHP, JD, SHEL, AZN etc... (randomly selected examples) is there are difference as far as paperwork for us during tax time with respect to trading US based stocks or no difference? and if they pay dividends is it again the same procedure as if US based stocks?

1 Answer 1


There's no difference. Some dividends may be foreign sourced and have foreign taxes paid on them, you'll see this on 1099-DIV box 7 (and 8). That can happen with many different dividend-producing stocks, and happens often with funds that invest in these stocks. Tax preparation software will generate the form 1116 if needed, automatically.

  • Ok... and if i did all this with my ira or roth ira, then nothing, no paperwork during tax time just like when we traded usa stocks right?
    – upstream
    Apr 16 at 19:50
  • 2
    Right, there's no tax effect in IRA, so the foreign tax credit would not apply (the foreign taxes would still have been paid by whoever distributed the dividends, so you'd lose a bit)
    – littleadv
    Apr 16 at 19:55
  • Ok thanks , but can you explain what you meant in parentheses?
    – upstream
    Apr 16 at 20:17
  • 1
    The dividend payer paid foreign taxes on the income distributed to you. Foreign tax credit reimburses you for that. In tax-deferred accounts you miss on that reimbursement.
    – littleadv
    Apr 16 at 20:26
  • Ok got it thanks
    – upstream
    Apr 17 at 10:59

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