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Topic: US dividends and CG taxation under the treaty  (Read 441 times)

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US dividends and CG taxation under the treaty
« on: November 07, 2020, 06:02:13 PM »
Hi,
My understanding is that the US has the right to tax US sourced dividends at 15% based on the treaty and the UK gives credit for this tax paid. Is this correct?


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Re: US dividends and CG taxation under the treaty
« Reply #1 on: November 07, 2020, 07:13:09 PM »
I am a USC living in the UK and HMRC tax my US dividends and cap gains and I claim that tax back on my US tax return.

I don’t know about other situations
Dual USC/UKC living in the UK since May 2016


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Re: US dividends and CG taxation under the treaty
« Reply #2 on: November 07, 2020, 07:20:14 PM »
Thanks. Does this apply to each category of Interest, Dividends and Capital Gains which originate in the US?


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Re: US dividends and CG taxation under the treaty
« Reply #3 on: November 07, 2020, 07:30:21 PM »
Thanks. Does this apply to each category of Interest, Dividends and Capital Gains which originate in the US?

For me ALL interest, dividends and cap gains from US sources that are not within retirement accounts like an IRA are taxable in the UK. I don’t hold any US municipal bonds if that is a category you are thinking of.
Dual USC/UKC living in the UK since May 2016


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Re: US dividends and CG taxation under the treaty
« Reply #4 on: November 07, 2020, 08:54:08 PM »
Thanks. I meant the non IRA taxable category. Good to hear that we can take the full deduction of it in the US return.


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Re: US dividends and CG taxation under the treaty
« Reply #5 on: November 08, 2020, 10:29:30 AM »
Thanks. I meant the non IRA taxable category. Good to hear that we can take the full deduction of it in the US return.

You're welcome. 

As I say, I can only comment on our own circumstances, and our son's. I'm far being a tax expert but am happy to share my experience, and I have learned a lot from this site.
« Last Edit: November 09, 2020, 10:58:56 AM by durhamlad »
Dual USC/UKC living in the UK since May 2016


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Re: US dividends and CG taxation under the treaty
« Reply #6 on: November 08, 2020, 01:16:52 PM »
My understanding is that the US has the right to tax US sourced dividends at 15% based on the treaty and the UK gives credit for this tax paid. Is this correct?

Palash,

Yes, this is correct. 

The Technical Explanation to the treaty, under Article 24, has an example.  See page 104 of the Technical Explanation.  https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/teus-uk.pdf


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Re: US dividends and CG taxation under the treaty
« Reply #7 on: November 09, 2020, 10:55:04 AM »
Thank you very much. Very educative. Much appreciated. :)


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Re: US dividends and CG taxation under the treaty
« Reply #8 on: November 13, 2020, 12:59:11 PM »
It may be helpful if you were to note the full analysis of the taxation of US dividends received by UK resident US citizens.
•   The dividends are paid without any withholding tax as you are a US citizen.
•   Under the treaty, you can claim a notional US 15% withholding tax in computing your UK tax.
•   The US then needs to give you credit against US tax for the above UK tax. So you should include a claim for this in your US tax return.


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Re: US dividends and CG taxation under the treaty
« Reply #9 on: January 08, 2021, 02:34:32 PM »
Your responses have been most helpful. Any tax preparers that could do both US and UK returns you would recommend?


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