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I'm a non-US citizen, and not residing in US, who uses an online brokerage firm to trade US stocks and options. Are my capital gains (short term and long term) and dividends subject to taxes? If yes, what are those taxes?

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You, lucky sir, if you are in fact a non-resident alien (in the US less than half of one year), are tax-free for capital gains with a few caveats and such.

Generally speaking, if you are a long term investor in non-real estate securities and spend no time in the US, your capital gains are not taxable.

If the short term gains appear to be from trading and not investing, they may be taxable.

Dividends are taxed at a merciless 30% with exceptions, unless there's a tax treaty between your home country and the US to say otherwise.

That said, you're still required to pay the capital gains/income taxes on all your income, home and abroad, in your home country.

Any tax experts feel free to edit for accuracy.

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  • Generally speaking, if you are a long term investor in non-real estate securities and spend no time in the US, your capital gains are not taxable. This is not entirely correct, you will still be taxed, but the deduction will be done by your brokerage. And you will need to report it on your tax returns, in your resident country. – DumbCoder Mar 9 '14 at 20:45
  • @DumbCoder no, not for capital gains. – littleadv Mar 9 '14 at 20:58
  • @littleadv Yep, I was looking at you! ;)) – user11865 Mar 10 '14 at 0:57
  • when filing taxes, how do you show that you are a resident of, say, Canada (which allows for only 15% dividend tax)? – sasha.sochka May 17 '17 at 0:12
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If you are trading from outside the US you should pay taxes on any profits in the country you are trading from. You should check with the tax department in the country you are trading from.

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A quick update for people finding this thread through Google. With the help of a few awesome Bogleheads, I compiled all the relevant research done into two Wiki articles:

This includes comparing US to Irish domiciled ETFs, how to calculate tax withholding leakage and estate tax concerns.

Hope you find this useful.

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