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Non-resident Alien US tax question

Non-resident Alien US tax question

Old Feb 15th 2021, 4:22 pm
  #16  
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Default Re: Non-resident Alien US tax question

Originally Posted by asnozz View Post
Thanks tht, a good point. Moneyfarm does request a W-9, so I'll see how they respond. Concerning my cash ISA (HSBC), I'll give them a ring during their business day.

I'm hesitant to close my UK accounts until I'm on a path towards a green card (I am currently working towards this).
Once you realize you will be paying the highest published tax rate (regardless of your own marginal tax rate) which for 2021 is 37%, plus state tax, plus interest for the number of years that you held the investments at IRS published rates, you will want to get rid of your investment funds pronto. Most people lose well in excess of 50% of the profit at sale time. Best to sell asap and reinvest in mutual funds here, unless you can guarantee that you will not to sell while subject to US taxes.
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Old Feb 19th 2021, 3:42 am
  #17  
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Default Re: Non-resident Alien US tax question

Same but different. I ‘had’ a UK ISA. Once the broker became aware I was living in the US, they told me they could no longer manage my account. Some shares I have liquidated and will just keep the cash in the UK. Some shares I do not want to sell. They have increased a lot in value over the 10 years I’ve owned them. I’ve been in the US for a year. I want to move those shares to a US broker but I am wary of any capital gains tax, or what the basis cost would be for those shares? TIA.
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Old Feb 19th 2021, 6:31 am
  #18  
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Default Re: Non-resident Alien US tax question

If these are shares originally purchased from one of the US stock exchanges in USD (albeit through a foreign broker) then you should not have any problems other than the time required to do the transfer from your current foreign broker to a new US broker. If these are shares originally purchased through a foreign exchange (almost certainly priced in the exchanges local currency versus USD) then you may find a US broker willing to accept the transfer as what they call a "pink sheet”. Trading in “pink sheets” involves more risk than trading in the regular stock mainly because of liquidity issues and mark ups. If you really want to keep the shares you may be better off selling the foreign version of the stock and buying the US version if there is one. Of course then you incur the immediate capital gain.

If these shares are some kind of mutual fund (like a UK OEIC, Unit Trust or Investment Trust) then it is extremely unlikely that you will find a US broker who is able and/or willing to accept them. if that is the case, and your current broker will no longer manage the investment then you probably have no choice but to sell as you will find it very hard to find a broker in any country who will accept the transfer.

Regardless, the cost basis is what you paid for them translated into USD at the exchange rate in force on the date of purchase, which you can estimate by looking at historical charts. If they are straightforward shares versus mutual funds then they are taxed like any other US based share at standard capital gains rates. If they are a mutual fund of some kind then they are taxed as a PFIC which has draconian tax rates. If they are PFICs my best advice is to swallow the tax hit and move on with your life. The longer you hold the shares the worse the tax situation becomes, not to mention the very extensive and complex paperwork, and record keeping that is required for these type of investments. The tax hit spirals rapidly with each year that passes because as well as paying tax on the gain at the maximum published tax rate for each year that you held the stock (regardless of your own personal marginal rate) you have to add compound interest at IRS published interest rates. State tax then adds insult to injury. The maximum personal tax rate under the Biden administration will likely increase in the future further increasing your tax bill.


Last edited by Glasgow Girl; Feb 19th 2021 at 6:45 am.
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