Do US Bond ETFs withhold 30% in taxes for non-US resident aliens in their distributions?

Discussion in 'Taxes and Accounting' started by Daal, Jul 24, 2015.

  1. Daal

    Daal

    Lets say a non-resident alien files his W8-Ben (with no tax treaty provisions). According to the IRS, capital gains are tax free in the US as well as "interest-related dividends or short-term capital gain dividends". I have tested the latter by owning an ETF that made a capital gain distribution and there was no 30% withholding. Has anyone tested the former? ETFs such as IEF, TLT, SHY probably qualify as 'interest-related dividends' so in theory these distributions are tax free. I could test it myself but I don't want to wait months for the answer
     
  2. Daal

    Daal

    Apparently the exemption to interest related dividends and capital gains has expired

    "Interest-related dividends and short-term capital gain dividends received from mutual funds.
    At the time this publication went to print, the exemption from chapter 3 withholding on certain interest-related dividends and short-term capital gain dividends paid by a mutual fund or other RIC had expired. To find out if legislation extended this exemption from withholding, go to www.irs.gov/formspubs or www.irs.gov/pub515. See Dividends paid by a RIC , later."

    Does anyone know if this is expected to be extended by congress anytime soon?
     
  3. Roth

    Roth

  4. Also for ETF
    I own MINT from Pimco and dont pay witholding TAX.
    In this table see % of payed dividend which are exempt from NRA Witholding Tax
     
    Last edited: Jan 3, 2017
  5. Daal

    Daal

  6. Daal

    Daal

    Apparently
    "ETFs are eligible, as long as they are "regulated investment companies" as defined Subchapter M of the Internal Revenue Code."
    Anyone has a list of all ETFs that are RICs in the US?