Tax Reporting: Foreign Tax Withholding

Foreign taxes are withheld on foreign stocks even though the shares are trades and were purchased on a U.S. stock exchange. They are withheld at the source (company) level and remitted to the foreign government, much like U.S. withholding taxes. U.S. taxpayers may receive a tax credit for these foreign taxes on their U.S. Tax returns. Consult your tax professional and refer to IRS Publication 514 “Foreign Tax Credit for Individuals” for more information on this subject.

In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this FAQ was not intended or written to be used and cannot be used for the purpose of avoiding tax penalties that may be imposed on any taxpayer.