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Starting to pay tax
JohnSail
Posted: Saturday, June 9, 2012 11:01 AM
Joined: 06/07/2010
Posts: 60


Dear Avmar

To start off with a bit of background, I am a 22 year old South African citizen and only have my South African Passport,
I would like to start trading stock online but I need a SSN I contacted TDAmeritrade and they were one of the only few American stock brokers that would accept SA clients, the others all have South Africans
"black listed" (probaly a bad word but it feels like it because I was told SA's cant open accounts with them) so it was a great relief to find TD.
Now I need to have some sort of tax documentation to pay tax on capital gains ( I know nothing about tax anywhere)

Do I file for tax in USA, can I?
Will I have to start paying tax on my income then too even though I work on a cayman islands flagged vessel and do not spend loads of time in the USA?
Would I have to start paying tax in SA? How does that work when I dont spend ANY time in SA? Havent been in SA since I started Yachting.

thank you so much in advance!

Anonymous
Posted: Monday, June 11, 2012 1:09 PM
Hi I use Internaxx which is very good and should except South Africans. They have good customer service so you will be able to contact them to help with your question. You need to fill out a W- 8BEN form for any trading company. This is just to tell the US government that you don't need to pay them any tax on dividends (US stocks), because you are not a US tax payer. you just fill out your social security number from your country even if you doing pay tax there. As long as you are not based anywhere (less than 6 months) depending on local tax laws you should not have a problem with tax. Peter
Tom
Posted: Tuesday, June 12, 2012 2:40 PM
Joined: 04/05/2008
Posts: 7


Hi John, Thanks for your email. You must pay tax on US source income, this would include portfolio income and wages earend while your vessel is cruising in United States territorial waters. The exception to paying tax is whether or not you qualify for "tax treaty benefits" with the United States. South Africa does have a tax treaty with the United States and as long as you are a RESIDENT FILER in South Africa and are paying tax to South Africa on your world wide income you might be exempt from paying tax in the United States. Unfortunately many yachting professionals file as non residents in their own country and do not pay taxes anywhere, if this is the case then you will be required to file a United States nonresident tax return reporting US source income. Thanks, Tom at AvMar.
heevahova
Posted: Wednesday, June 13, 2012 12:36 PM
Joined: 12/07/2010
Posts: 58


Foreign nationals earning in the USA can file taxes in there home of record, or wherever you please for that matter. However there must be a record of tax payments or you will be liable for us taxes. this is the most generous tax code in the world. If you use the american trading system for monetary gains you should be pleased to pay taxes wherever you contribute. I highly recommend you begin paying taxes somewhere, before you consider yourself wealthy enough to trade stocks. There is no escape for taxation in yachting, they will eventually catch up with you... it's not 1980 anymore...
rodsteel
Posted: Wednesday, June 13, 2012 5:16 PM
Joined: 25/06/2009
Posts: 277


JohnSail wrote:
...I am a 22 year old South African citizen ...,
I would like to start trading stock online but I need a SSN ...
 
Do I file for tax in USA,...
 
Would I have to start paying tax in SA? ...
 
 Havent been in SA since I started Yachting...

 

John,

 

As a non-resident, foreign national you would not be able to get a US SSN. The tax reporting ID number that you would require (if you have US source income) would be an ITIN (see the following for more official information).

 

http://www.irs.gov/individuals/article/0,,id=222209,00.html

 

As alluded to by Tom, your tax liability depends on your tax domicile/residence (not necessarily the same "place" as you are actually living/working). Consult an expert for SA regarding possible non-resident liability (globally, non-resident tax issues tend to be somewhat complex - so take all "amateur" advice with a grain of salt, including mine).

 

The following articles touch on the issues you may need to consider regarding a US stock trading account.

 

http://www.greencompany.com/EducationCenter/GTTRecTraTypNonResident.shtml

http://www.bankrate.com/finance/taxes/capital-gain-tax-nonresident-investors.aspx

 

This is the section of Publication 519 mentioned above that references Stock Trading (look under the heading label "Other Trade or Business Activities" - just below the "Non-Resident Aliens" heading) .

 

http://www.irs.gov/publications/p519/ch04.html#en_US_publink1000222308

 

Enjoy,

 

Rod


 
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