I am citizen from one of the EU countries who has been living in the US on H1B visa for few years. Now I am considering to move back to my home country in EU.

I have some shares in my US bank account that I bought several months ago. Now I am trying to figure out tax implications regarding sale of these shares.

Would I have to pay any US income taxes on this stock if I made gain after the move to my home country?

  • Does the stock generate dividends or interest? – Joe Apr 28 '16 at 19:06
  • @Joe No, just a regular stock. – john1234 Apr 28 '16 at 19:07
  • And you're asking if you'd pay taxes if you sold the stock after you leave, or if you'd pay taxes if you held the stock after you leave? – Joe Apr 28 '16 at 19:16
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    @Joe I am asking if I would have to pay any US taxes, because I bought the stock at the time I was US resident, but intend to sale the stock once I will be resident of my home country in EU. Also, my home country has lower income/capital tax than US so I have also motivation to sell once I would not be US resident. – john1234 Apr 28 '16 at 19:31
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    So you're asking about the sale of the stock after you leave. – Joe Apr 28 '16 at 19:32

It's fairly complicated, but the answer is that you won't pay US tax for selling a common stock when you're a non-resident for tax purposes, so long as it's not tied to a business you have based in the US, and as long as you're not here for 183 days or more in the past three tax years plus 31 days in the current tax year. You also have to not have a valid green card (even if you are not here) if I understand the Green Card Test right. See page 3 of publication 519 for more details.

With some exceptions, then, on page 21 of publication 519, the IRS notes:

If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year.

This assumes you are only discussing capital gains, and this is an ordinary stock. Mutual funds may be taxed even if you are a non-resident, dividends will be taxed even as a non-resident, and gains from sale of property, even through an REIT, will be taxed.

Some further reading:

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