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News & Tips from an ITIN Acceptance Agent

Understanding Capital Gains Tax as a Non-Resident of the USA and How to Reclaim

Just Breve - Understanding Capital Gains Tax as a Non-Resident of the USA and How to Reclaim
Just Breve - Understanding Capital Gains Tax as a Non-Resident of the USA and How to Reclaim

Investing in the US market can be lucrative for non-residents, but it's important to understand the tax implications, particularly regarding capital gains tax. Non-residents who earn capital gains from US investments may be subject to US tax obligations. In this article, we'll delve into capital gains tax for non-residents of the USA, including how it's calculated and strategies for reclaiming any overpaid tax.


Understanding Capital Gains Tax as a Non-Resident:

Capital gains tax is a tax levied on the profit earned from the sale of capital assets, such as stocks, bonds, real estate, or other investments. For non-residents of the USA, capital gains tax is imposed on gains derived from US-situated assets, including stocks of US companies or real estate located in the United States.


The tax rate on capital gains for non-residents varies depending on the type of asset and the duration of ownership. Generally, short-term capital gains (assets held for one year or less) are taxed at ordinary income tax rates, while long-term capital gains (assets held for more than one year) are taxed at preferential rates, typically lower than ordinary income tax rates.


Reclaiming Overpaid Capital Gains Tax:

If you're a non-resident of the USA and believe you've overpaid capital gains tax, there are several scenarios in which you may be eligible to reclaim the excess tax paid:


1. Tax Treaty Benefits: Many countries have tax treaties with the United States that provide relief from double taxation and may offer preferential tax rates on capital gains. Review the tax treaty between your country of residence and the USA to determine if you're entitled to any tax benefits or exemptions.


2. Foreign Tax Credit: Non-residents may be eligible to claim a foreign tax credit on their home country tax return for any capital gains tax paid to the US government. This credit can offset tax liabilities in your home country, reducing the overall tax burden on your investment gains.


3. Consult with Tax Professionals: Seeking guidance from tax professionals familiar with international tax laws and regulations is crucial for reclaiming overpaid capital gains tax. Tax advisors can help you navigate the complexities of cross-border taxation, identify available tax benefits, and maximize your tax savings.


How to reclaim the overpaid tax:

Apply for a US tax number and file a US tax return: If you've determined that you've overpaid capital gains tax, you can file a tax return with the IRS to claim a refund for the excess tax paid. Be sure to include any supporting documentation and adhere to the IRS's guidelines for filing an amended return. You will simultaneously also apply for an ITIN if you do not have an SSN.



Navigating capital gains tax as a non-resident of the USA requires careful consideration of tax obligations, available tax benefits, and strategies for reclaiming overpaid tax. By understanding the tax implications of US investments, consulting with tax professionals, and exploring options for reclaiming overpaid tax, non-residents can effectively manage their tax liabilities and optimize their investment returns in the US market.


Can Just Breve help?

Yes, we can. Just Breve is a US tax accounting firm, assisting non-US persons with their US tax filing requirements, including obtaining a refund of overpaid US tax. This includes applying for a new ITIN or renewing an existing ITIN. We are a certifying acceptance agent (CAA) and have a contract with the IRS to help with Form W-7 ITIN applications.

T: 0208 1444632


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