Discussion:G-4 Visa and Cap Gains
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Discussion Forum Index --> Tax Questions --> G-4 Visa and Cap Gains
| 2 March 2007 | |
| Client is G-4 visa holder and receives IRS letter asking them file 1040NR to report a amall amount (under $2,500) of stock sales. I know G-4 Visa holders are exempt individuals for income tax purposes, but I don't know that this applies to stock sales. Does anyone know the following:
Where I can find the Code Section that exempts G-4 Visa holders for income tax purposes; and Where I can find the information on the stock sales? Thanks in advance. Tom | |
| 2 March 2007 | |
| Isn't a G visa holder present in the US by being an employee of the sponsoring organization? If he is a NR, then typically he would not be taxed on capital gains unless the assets are US real property assets or US business assets. Sales of stocks are generally foreign sourced if the NR does not have a tax home in the US. Publications 515 and 519 with IRS should help :) | |
| 2 March 2007 | |
| It was the sale of US property that triggered the gain. Client, due to their understanding they are exempt, didn't declare on any return. Now IRS wants them to file. What triggered this issue as well is client owns home and mortgage interest is reported under their identification number. The IRS wants to know why no income if they have a mortgage. | |
| 3 March 2007 | |
| An employee present on a G-4 visa is exempt from US income taxation on his compensation received from his employer. Sec. 893(a). In addition, an employee on a G-4 visa is not a resident. Therefore, as a nonresident alien, he would be taxable on capital gains from the sale of US real property. In addition, if he is present in the United States for more than 182 days during the year, he would be subject to capital gains from US sources (e.g. broker account). Sec. 871(a)(2). | |
| 3 March 2007 | |
| Riley,
Thanks for the information. This is extremely helpful. Tom | |
| 17 March 2007 | |
| I have a G4 client as well who was in the US for 200+ days. His income is as follows:
On 1099-DIV: 20,000 ordinary dividends 1,700 qualified dividends 9,500 capital gain On 1099-INT: 2,800 interest income (from US banks) 19,000 interest on US treasure obligation I would think all of this would be taxable but according to the above dicussion there seems to be some special exceptions for G4 visa holders which I'm not understanding. Thanks in advance for your help understanding this. | |
| 17 March 2007 | |
| A full-time employee of an international organization who is admitted under a G-4 visa is taxed under the normal rules for a nonresident alien as long all of his US physical presence days were under the G-4 visa. See Sec. 7701(b)(5)(B)(ii). Thus, if your client was on a G-4 visa as an employee of an international organization for the entire 200 days that he was present in the United States in 2006, he is treated as a nonresident alien for 2006.
As a nonresident alien, he is subject to taxation on his capital gains realized in a U.S. brokerage account if he was present in the U.S. for at least 183 days in 2006. Sec. 871(a)(2). The tax rate is 30% unless a lower treaty rate applies. A NRA also pays US taxes on US source dividends at the 30% rate (unless a lower treaty rate applies). Interest from the US Treasury is also subject to this tax rate (unless a lower treaty rate applies). Deposit interest from US banks should not be subject to taxation. | |
| 21 March 2007 | |
| Hi Riley. I'm still a little hung up on a NRAs taxation of US treasury obligation.
When I click on this link: http://www.irs.gov/publications/p519/ch03.html#d0e2517 It states about NRAs that "Interest on obligations of a state or political subdivision, the District of Columbia, or a U.S. possession, generally is not included in income." My client is contesting that he doesnt owe tax on a US treasury obligation b/c of the above statement. My interpretation is that the above is NOT referring to the United States/US Treasury itself just the 50 US states, DC, etc. Thanks for your help. | |
| 21 March 2007 | |
| Under Internal Revenue Code ยง 871(h)(7) interest on US T-bonds issued before July 19, 1984 would generally be subject to the 30% tax. Any bond issued on or after that date is exempt if the NRA files a Form W-8BEN with the Treasury Department. | |
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Questions asked by non-tax-pros have been moved to related discussions in the Consumer Forum, along with any relevant responses. Refer to this royalty discussion or this discussion on G-4 visas.
