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lovelinein2009 · Sep 23, 2009, 05:38 PM

Hi,
I am on H1 B Visa working in USA from last 2 years. I am planning to go back to India in December 2009. I have been paying taxes regularly. I have some questions :-

(1) I have some investments in stock market which I want to keep it even if I return back from here. As this will be my only income in USA after 2009 how can I pay tax on it?
(2) If I sell out all my stocks in 2010, till when do I have to file taxes in usa
(3) I am planning to start a business in India, Do I need to show income from that business in my 2011 filling ( keeping in mind that I will have share income in 2010 so need to file taxes for the same in 2011). If yes then that income would be taxable in india also.

Thanks in Advance for help.

MukatA · Sep 24, 2009, 01:02 AM

You must inform the broker of your nonresident status and the broker will withhold tax on payments to you.

AtlantaTaxExpert · Sep 24, 2009, 08:47 AM

You will need to show the stock sales transactions on Schedule D, which is mailed with Form 1040NR. I believe that tax rate imposed is 30% on the profit from the sale.

You will NOT have to show your profits from the India-based business on this tax return.

lovelinein2009 · Sep 24, 2009, 05:09 PM

Thanks a lot for the replies Mukata and AtlantaTaxExpert.

So in 2011 when I will only have Share Income, I need to Fill 1040NR form. Is it necessary that broker should withhold the taxes. Can I pay it with my tax return?

Five Rings · Sep 25, 2009, 05:57 AM

Excuse me everyone but nonresident aliens pay no US tax on the alienation of personal property (including stock).

Please note in sec. 871 that capital gains are not mentioned in the list of income subject to the 30% tax.

Dividends are another matter entirely and you should file a W-BEN with your broker.

Further, once you return to India, you owe no tax obligations to the US unless your income is derived from a trade or business in the US.
Further, you are protected under the India/US tax treaty and the provisions thereof.

AtlantaTaxExpert · Sep 25, 2009, 07:06 AM

I yield to Five Rings' greater knowledge on all international tax issues.

lovelinein2009 · Sep 25, 2009, 03:39 PM

Thanks for Reply Five Rings.

Does it mean that I do not have to pay taxes on the capital gains that I will make after leaving this country? Do you know where can I get the US/India Tax Treaty?

Five Rings · Sep 27, 2009, 09:18 AM

IRC sec. 865(a)(2) specifically excludes gains from the sale of personal property by a nonresident alien from taxation in the US because it is deemed to be sourced without the US. So yes, you do not pay taxes on any gains you may be fortunate enough to make on these investments.

See: Sec. 865. Source rules for personal property sales

Here is the US/India treaty; be sure to download both treaty and the explanation:
India - Tax Treaty Documents

lovelinein2009 · Sep 27, 2009, 02:22 PM

Thanks a lot Five Rings. This will definetely Help. Appreciate it completely..