Hey guys. I hope you guys can shed some clarity to a few questions I have. I did some searching but I could not find exactly questions answered:
- If I open up a investment account and buy stocks (in HK or other overseas country), of course this is something I have to report on the FBAR. If I then use it to buy stocks (for example $100 worth) and it gets a return of 20%, the total value within the account is 120$ at the end of 2020. But since I have not sold the stock yet, I haven't effectively made the 20$. Do I have to report it when I do my 2020 taxes?
- In the above example, whether I have to report it in 2020 or when I actually sell it; I am only due taxes for the capital gains of 20% thus 20$, not the initial 100$ included for a total of 120$ right?
- What if it was in a country where there was already taxes incurred for the 20$ gains. For example, 5$, thus I only get back 115$. Is there a double-taxation avoidance which means I am only taxed based on 15$ or subtracts the 5% that I have already been charged?
- I heard someone saying it is ridiculously expensive for Americans to invest overseas as the government taxes a lot. I am not sure if there is anything else I might have missed beyond capital gains?
It would be great if you guys could shed light here. I really need to start doing something with the money in my bank!
-
30-12-2020, 08:52 PM #1
US Tax for investments overseas
-
31-12-2020, 10:19 AM #2
Not sure if I fully understand your question but if you are a US citizen, it's no different to any other investment account. You get a 1099 form at the end of the year and, based on the transactions, lists the various gains you have made. If you only buy but no sales, the 1099 will be zero. If you pay tax (to HK) I think you get to deduct that tax from tax owed to the US- just as with salary- so if I pay 100 dollars to HK government as my salary tax, there is a section to fill that out as against my US taxes owed- forget if it's directly off the final US tax owed as the accountant deals with that part. Unless I am mistaken, I don't think there are any special taxes owed because it's a foreign investment but the reporting stuff is a pain as I know that I have to do some crazy calculation every year on the pitiful value of my MPF money, and sometimes end up owing an extra dollar or two in taxes as a result...so maybe this is the part that people are talking about owing taxes on...it's not a huge tax burden but is an accounting hassle to the point where doing my taxes is pretty expensive and beyond my skill set (yes, I could do them but would likely miss some deductions and such, the software isn't really set up for expat tax issues).
