Capital gains tax rules for non-resident non-citizens who own US assets

Thanks, this is really helpful. But I'm still a bit confused about the whole capital gains thing. Let's say I sell some Apple stock I bought when I was working in the US. As a non-resident non-citizen now, I don't have to pay US capital gains tax on that profit? That seems too good to be true? What about dividends from US stocks?

Capital gains from selling personal property (including stocks and crypto) are generally not US-taxable for NRAs unless you were physically present in the US for 183 days or more during the year of the sale. This is indeed a favorable aspect of the US tax code for non-residents. Dividends are different - they're considered US-source income and are typically subject to a 30% withholding tax, though this rate may be reduced by tax treaties depending on your country of residence. Your brokerage should automatically withhold this amount before paying you dividends.

Did they help with filing the actual forms too? Or just give advice on what to do? I'm in a similar situation but in Canada now and really struggling with figuring out all the cross-border investment stuff.

Was this expensive? I'm always skeptical of tax services that claim to help expats because they usually charge premium rates knowing we're desperate for help. Also, what about state taxes if you lived in a place like California before leaving?

They don't file the forms for you, but they provide detailed instructions and explanations that make filing much easier. They break down exactly which forms apply to your situation and how to complete the key sections. I used their guidance to file my 1040-NR myself without issues. Regarding cost, they're actually reasonable compared to international tax specialists I contacted. They offer different service levels depending on your needs. And for state taxes, yes they covered that too - they explained I needed to file a non-resident state return for the partial year I lived in New York, but didn't need to report investment income earned after I established residency abroad.

This seems sketchy. How does a third-party service get the IRS to call you when regular people can't get through? Is this even legit or just some scam to get your tax info?

Does this work for international callbacks? Like if I'm living in Europe now, can they still get the IRS to call me? And what if I need to talk to a specific department at the IRS about NRA tax status?

It's actually not sketchy at all - they use an automated system that continually redials the IRS until it gets through, then connects you. They don't access any of your tax info. It's basically just solving the phone queue problem that makes it impossible for regular people to reach the IRS. For international callbacks, yes it works! You'll need to provide an international number, and they can reach you anywhere. Regarding specific departments, when the IRS calls you, you start with a general agent who can then transfer you to specialty departments if needed. In my case, they transferred me to someone who specialized in non-resident taxation.

Thanks for sharing this. How did your brokerage find out you weren't in the US anymore? Was it just because you were logging in from foreign IPs consistently? And how difficult was the process of unfreezing your account once they discovered it?

They noticed consistent foreign IP logins over several months. Also, I had updated my phone number to an international one but forgot about the address, which raised flags in their system. The process of unfreezing wasn't terrible but required submitting a ton of documentation - proof of my foreign address, passport, visa status, completed W-8BEN form, and a signed statement explaining my residency situation. It took about 2 weeks to get full access back. Different brokerages have different policies, but many major ones like Fidelity, Schwab, and Interactive Brokers actually have specific processes for non-US residents. Some might restrict certain trading activities or products, but they usually don't just close your account.

This!! I got hit with surprise taxes in Germany on my US stock sales even though I wasn't taxed in the US. Ended up with a mess because I didn't report properly in either country. Make sure you understand BOTH tax systems.

Exactly! And each country has different rules about when they consider you a tax resident. Some countries (like the UK) have a "split year" treatment where you're only taxed as a resident for the portion of the tax year you actually lived there. Others might consider you a full-year resident if you're there on a certain date or for a minimum number of days. It's super important to check the residency rules for both countries and any applicable tax treaties. Tax treaties usually have "tie-breaker" rules that determine which country has primary taxing rights when you could be considered resident in both countries during a transition year.

This is super helpful, thanks for sharing your experience! I'm in a similar boat - moved back to Canada after my work visa expired and still have investments in my US accounts. The dual-status return concept makes a lot of sense, but I'm confused about one thing: how do you determine the exact date when you switched from resident to non-resident status for tax purposes? Is it the day you physically left the US, or when you established residency in your home country? Also, did you have any issues with your Canadian tax obligations on the US investments? I'm worried about getting double-taxed or missing something important on the Canadian side.

Great question! For tax purposes, you're generally considered to change from resident to non-resident status on your "last day of residence" - which is typically the day you leave the US with the intention of not returning as a resident. This is different from just taking a vacation - it's when you've made the decision to permanently relocate. The IRS looks at factors like when you moved your belongings, closed US bank accounts, ended your US employment, etc. In most cases for people on expired visas, it's the day you physically left the US since you legally had to leave. For the Canada/US tax treaty, you'll likely benefit from the foreign tax credit system. Canada will generally tax you on worldwide income once you become a Canadian resident, BUT you can claim credits for any US taxes paid (like the 30% withholding on dividends). This prevents true double taxation. The tricky part is timing - make sure you understand when Canada considers you a resident for tax purposes. If you arrived in Canada partway through the tax year, you might be able to file as a part-year resident there too, similar to the dual-status approach in the US. I'd strongly recommend getting professional help for at least the first year of filing in both countries - the interaction between the two tax systems can be complex, and mistakes can be costly!

Thanks for mentioning Publication 519 - that flowchart is exactly what I needed! I've been stressing about proving my "closer connection" to my home country since I still have some ties to the US. One question about the W-8BEN form - do you remember how long it took for your broker to process it and update your withholding status? I'm planning to sell some positions soon and want to make sure the correct tax treatment applies. Also, did you have to provide any additional documentation beyond the W-8BEN to prove your foreign status, or was the form sufficient? I'm really glad to hear that being proactive with the broker worked out well for you. I've been putting off the call because I was worried they might restrict my account or make things complicated, but it sounds like most of them are used to handling these situations.

The W-8BEN processing was pretty quick for me - TD Ameritrade updated my status within about 3-5 business days after I submitted it online. The form itself was sufficient for basic withholding changes, but they did ask for a copy of my Australian passport as additional proof of foreign status. One important thing to note: if you're planning to sell positions soon, the W-8BEN mainly affects future dividend withholding, not the tax treatment of capital gains you're about to realize. Since you're likely already considered an NRA based on your physical absence, those capital gains should be exempt from US tax regardless of when you submit the W-8BEN. Just make sure you keep good records of your departure date and residency establishment in your home country - you'll need those details for both your US dual-status return and to claim any treaty benefits. The IRS can be pretty reasonable about these transitions if you document everything properly and file the right forms. Definitely make that call to your broker though - in my experience, they'd much rather work with you proactively than discover the status change later through their compliance monitoring!

This is really helpful! I'm actually in a very similar situation - just moved back to the UK after my visa expired and have been putting off dealing with my US investment accounts. Your point about tax residency vs address on file is reassuring, but I'm curious about something: did you have any issues with your German tax obligations when you first established residency there? I'm worried about the timing - like if I sell some US stocks now (as an NRA) but then become a UK tax resident later this year, will the UK want to tax those gains even though they happened before I was a UK resident? The whole "when does tax residency actually begin" question is stressing me out because it seems like it could affect which country has the right to tax what. Also, how strict was E*Trade about the documentation when you finally updated your status? I'm with them too and have been nervous about triggering a review.

Great question about the timing! For UK tax purposes, you generally become a UK tax resident based on the statutory residence test, which looks at factors like how many days you spend in the UK and whether you have accommodation there. The good news is that most countries, including the UK, typically only tax gains that occur after you become their tax resident. So if you sell US stocks while you're still considered a non-resident of the UK (but already an NRA for US purposes), those gains would likely fall into a gap where neither country taxes them - which is actually favorable for you! Just make sure to keep detailed records of exactly when you established UK residency versus when you made the sales. Regarding E*Trade, they were actually pretty reasonable once I proactively contacted them. I had to provide a copy of my German passport, fill out the W-8BEN form, and provide proof of my German address (utility bill). The whole process took about a week, and they didn't restrict any of my trading activities. The key was being upfront about the situation rather than letting them discover it through their monitoring systems. One tip: before you make any major sales, consider getting a consultation with a tax advisor who specializes in US-UK tax issues. The timing of when you establish UK residency could significantly impact your overall tax bill, and it might be worth strategically planning your investment sales and residency establishment dates.

This is such a comprehensive overview, thank you! I'm in a very similar situation - just moved back to India after my H1-B expired and have been paralyzed by fear about making any moves with my US investment accounts. Your point about being proactive with the brokerage is really reassuring. I've been putting off calling Schwab for weeks because I was convinced they'd immediately freeze everything or force me to liquidate. It's good to know that most major firms have processes in place for this. One question about the dual-status return - do you remember roughly how complex that filing was? I'm trying to decide whether to attempt it myself or just bite the bullet and hire a professional for this transition year. Also, did Singapore end up taxing your US investment gains, and if so, were you able to avoid double taxation through treaty benefits? I'm especially nervous about the timing of everything since I only left the US about 6 weeks ago, so I'm still very much in that transition period where I need to be careful about how I establish my new tax residency.