Do foreign partners pay US taxes?

Discussion in 'Prop Firms' started by JohnTack, Jul 25, 2007.

  1. JohnTack


    Hi all. If you know anything please advise.

    Should foreign traders of US prop firms pay US taxes if they files W8BEN form?
  2. The W8BEN is used to certify to the IRS that the beneficial owner of the account is a non-US person not engaged in a US trade or business. The results for such non-US person (referred in the US tax code as a nonresident alien), are as follows:

    1. Capital gains and losses from securities transactions: generally not reportable to US tax authorities.

    2. Dividends from US paying corporations: 30% withholding is required, unless a lower treaty rate applies.

    3. Interest from deposits in US banks: exempt from US taxation.

    4. Other interest from US sources: Generally exempt if the interest meets a complicate definition of something called "portfolio interest."

    5. Gains from the sale of US Real Property Interests: Taxable and subject to withholding. This is very complicated and results from the passage of the Foreign Investment in US Real Property Tax Act (FIRPTA) in the early 1980s.

    Good luck.

  3. We issue K-1's (distribution of partnership income) based on Mark to market pricing, and from what I'm told, it depends on which country you are a citizen of, and what type of taxation treaty the U.S. has with that country. I think our Canadians just report the U.S. income on their own taxes, not sure what the other guys do.

    (Not meant as tax advice).

  4. Does it mean the non-US partner (limited partner of the LLC) is not required to pay the trading profit?