Tax implications for trading foreign markets?

Discussion in 'Retail Brokers' started by seasideheights, Feb 8, 2008.

  1. Etrade is blasting their ads everywhere that promote trading in other countries.

    What are the tax implications of doing that?

    Do taxes need to be paid in the foreign countries as well as the USA for USA residents?

    I'm not looking to trade foreign markets. I'm just curious what these people do as far as taxes. Does anyone know?
  2. As a general rule, any taxes that need to be paid on foreign stock transactions (including dividends), is withheld. That is, you don't need to file a tax return. These withholdings can then be taken as a tax credit on your U.S. return. So your total tax payments will be the same as if the earnings were on U.S. stocks only.

    I say "general rule" because it requires that the other country and the U.S. have a tax treaty.