Expert: Dr. Joseph de Beauchamp - 9/9/2005

Question
Dear Dr. Joseph de Beauchamp

Yes, my address is outside of US. However, I read somewhere that all brokerage houses, corporations, banks, and any other financial institutions are required to withhold 30% (if there is no special Tax Treaty in force with my resident country, and there is none) from all non-residents from interest and dividend income. While interest and dividends from US based companies are considered to be "sources within the US".

However, I did not understand does it refer to all non-residents, or only to non-residents living (with permanent address) in US.

Please clarify

Yours
Yuri

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Followup To
Question -
Dear Dr. Joseph de Beauchamp

I am non-U.S. citizen and plan to invest money into index funds. Do I have to pay any taxes inside U.S. on capital increase, dividends, etc. and if yes, which ones?

Yours
Yuri
Answer -
Yuri,

As long as you have your address non-usa, then you will only pay taxes for your country.

Dr. Joseph de Beauchamp

Answer
Yuri,

If you are required to complete USA income form, there is a spot where it asks you about accounts that you control outside the USA. If you are to sign and deliver this tax USA form and answer that you have no accounts outside the USA in your control, this could be a $500,000 fine. You could face worst than this: they decide to send you back to your orginal company. You may not want to split hairs on this one concern.

Dr. Joseph de Beauchamp