US taxes on UK dividends

Hi everyone,

I have been looking for an answer on the forum to the point hereunder but wasn't able to locate an answer to it.


According to the IRS's 2015 regulations, the tax rate on qualified dividends for those that have ordinary income taxed at 10% or 15% do not pay any tax on the dividends. The threshold for a single person amounts to $37,950 while for a married person that amounts to $75,900 for the 2017 year. These amounts don't take in consideration any  standard deduction or itemized deductions you may have.

Taking the example of a lot of UK directors paying themselves a low salary and high dividends, paying themselves £43,000 and a spouse making less than £15,000 for a total of £58,000 (more or less $75,000 at an exchange rate of 1.30) would a US citizen resident in the UK have any US tax liability on those qualified dividends? Or is this rule only applicable for US residents? Am I missing something?

Many thanks for your help.

I think that US qualified dividends come from individual stocks that have IRS recognized ticker symbols or cusip numbers, or US registered funds that trade those stocks. My wife’s sister here in England plays the game you mention with her own registered company where she pays herself a salary of £11,000 which attracts no income tax, then pays herself a dividend which has a tax free amount of ~£5k then is taxed at 5%. If she were a USC I doubt very much the USA would recognize her company, which trades on no stock exchange.

In the situation you describe and assuming the company is a CFC, SubPart F would be more of a concern.