If you are a non-resident alien, you are exempted taxes on the incomes through interests in the bank, stock gain and mutual fund capital gain. There will be no withholding taxes. Without social security number, non-resident aliens need to fill W-8BEN form when opening bank account in order to validate your non-resident alien-ship, the validity is 3 years. After that, the form needs to be re-completed or the withholding taxes will apply.
If it is a joint account, then each person needs to fill out W-8BEN. If one of the account holder is American citizen, Then the account will automatically be considered owned by American citizen, there is no benefit applied to foreigner anymore.
When it comes taxes, here are a few things to note:
The income tax bracket between foreigners and Americans are the same. However, foreigners won't have the between 2 tax benefits that Americans have:
1. Personal Exemption: American tax payers have $3700 exemption or $7400 if married. When there is dependent, there will be more personal exemption. Foreigner however, will only have $3700 personal exemption, unless this foreigner is Mexican, Canadian or South Korean.
2. Standard Deduction: $5800 per person or $11600 if married. Foreigners have to use itemized deduction. However, if a foreigner hasn't lived in America long enough to become resident alien, there isn't much itemized deduction to apply.
Real Estate related taxes:
Foreigners can buy income property in America, but the rental income and the future real estate gain when selling the property are subjected to tax just like it is for American citizens. However, they need to file tax using 1040NR.
FIRPTA or Foreign Investment Real Property Tax Act Of 1980 has it that the investment property of foreigner will not have long term capital gain when selling it with a gain. The gain is considered ordinary income for foreigners.
When foreigner is selling the property, if the property is not resident property and it is more than $300K, there is a withholding taxes during the sales, which is 10%, regardless if the seller is selling it with a gain or not. Some states also has withholding taxes on foreigner's home sales. In California, it is 3.3%.
Since these are withholding taxes, when tax payer files the annual tax return, it can potentially have a return depending on the tax situations..
If it is a joint account, then each person needs to fill out W-8BEN. If one of the account holder is American citizen, Then the account will automatically be considered owned by American citizen, there is no benefit applied to foreigner anymore.
When it comes taxes, here are a few things to note:
The income tax bracket between foreigners and Americans are the same. However, foreigners won't have the between 2 tax benefits that Americans have:
1. Personal Exemption: American tax payers have $3700 exemption or $7400 if married. When there is dependent, there will be more personal exemption. Foreigner however, will only have $3700 personal exemption, unless this foreigner is Mexican, Canadian or South Korean.
2. Standard Deduction: $5800 per person or $11600 if married. Foreigners have to use itemized deduction. However, if a foreigner hasn't lived in America long enough to become resident alien, there isn't much itemized deduction to apply.
Real Estate related taxes:
Foreigners can buy income property in America, but the rental income and the future real estate gain when selling the property are subjected to tax just like it is for American citizens. However, they need to file tax using 1040NR.
FIRPTA or Foreign Investment Real Property Tax Act Of 1980 has it that the investment property of foreigner will not have long term capital gain when selling it with a gain. The gain is considered ordinary income for foreigners.
When foreigner is selling the property, if the property is not resident property and it is more than $300K, there is a withholding taxes during the sales, which is 10%, regardless if the seller is selling it with a gain or not. Some states also has withholding taxes on foreigner's home sales. In California, it is 3.3%.
Since these are withholding taxes, when tax payer files the annual tax return, it can potentially have a return depending on the tax situations..
