Check out some similar questions!

NomadGoddess · Aug 16, 2010, 03:19 AM

Hi! If a tourist on a B1 Visa were to open bank accounts for savings, checking, CDs, Money Market Account, and IRA in the US, will the interest gained on those accounts fall under portfolio dividends ( which has a withholding tax of 25% under a tax treaty between the US and his home country ), or will it fall under interest ( withholding tax of 15% ) ?

I'm quite confused if he's liable for US taxes since I've read in the IRS website that --> "If the interest income is paid by a U.S. bank, a U.S. savings & loan company, a U.S. credit union, or a U.S. insurance company to a nonresident alien, it is nontaxable and nonreportable (no 1099 or 1042-S reporting) unless the interest income is effectively connected with a U.S. trade or business. "

Does that mean that the tax treaty laws only applies to resident aliens, and not to tourists who are not involved in trade or business in the US?

Lastly, what forms does he need to collect upon interest or submit prior to opening an account to ensure that they withheld the appropriate taxes? Does he still need to come back next April just to file his taxes?

He only visits the country every Summer, from June to mid-August ( a total of 90 days or less in a year ). The amount that he is planning to deposit exceeds $250,000 from savings in his home country and had already been taxed before.

MukatA · Aug 16, 2010, 04:20 AM

Submit Form W-8BEN to the financial institution where you wish to deposit the money. You are nonresident alien so the bank interest on saving, CD, and money market is not taxable.
You do not need any treaty benefit.

wnhough · Aug 16, 2010, 05:21 AM

Quote, " If a tourist on a B1 Visa were to open bank accounts for savings, checking, CDs, Money Market Account . . ."--Actually a B1/B2 visa holder can't open a bank account in the US; the visa is just for short visits for business or tourism, so the person needs to get an IRS ITIN to open bank accounts in the US and needs to prove to the IRS whyhe/she with the tourist visa needs it.

NomadGoddess · Aug 16, 2010, 04:51 PM

Originally Posted by wnhough

Quote, " If a tourist on a B1 Visa were to open bank accounts for savings, checking, CDs, Money Market Account . . ."--Actually a B1/B2 visa holder can't open a bank account in the US; the visa is just for short visits for business or tourism, so the person needs to get an IRS ITIN to open bank accounts in the US and needs to prove to the IRS whyhe/she with the tourist visa needs it.

Thanks for the answers. :) So does that mean that it's illegal for a B1 Visa foreigner to request an ITIN at IRS just so he could open a bank account here?

He has 10 year multiple entry VISA to US. Would he get banned just for requesting an ITIN or for trying to open a bank account?

He really wishes to bank here as there is bigger FDIC Insurance. What would be the right steps for a nonresident alien to go about this? :confused:

wnhough · Aug 16, 2010, 08:26 PM

Quote,"So does that mean that it's illegal for a B1 Visa foreigner to request an ITIN at IRS just so he could open a bank account here?He has 10 year multiple entry VISA to US. Would he get banned just for requesting an ITIN or for trying to open a bank account?
"---No! It is NOT illegal. As you know,IN GENERAL, to open a bank account, he/she, I mean the multiple B1/B2 visa the holder, needs to provide his/her identity(in the U.S. this is most likely his/her Social Security Number or ITIN) to a bank.However, in a RARE case, a person was able to open one at the Chase bank without a ITIN or SSN by turnin' in the person's foreign passport and something like a utility bill or phone bill that shows his name and address or his credit card.
Anyway, an ITIN number is available from the Internal Revenue Service. To get one, the international visitor must complete Form W-7 (PDF) and take that form, with his/her passport, visa and I-94 to the IRS. Please visit the IRS website; Internal Revenue Service.
So, the person needs to get an IRS ITIN to open bank account in the US and needs to prove to the IRS why he/she, with the visa, needs it. See what I mean?
THough the person holds 10 year multiple B1/B2 visa for US, he/she does not qualify( NOT ELIGIBLE) for SSN as a visitor for pleasure, but he/she can apply for ITIN allowing him/her to have a bank account instead.

MukatA · Aug 16, 2010, 10:24 PM

NomadGoddess,
Check with the financial institution if they need ITIN to open your account. Tell them that you are nonresident alien.
If yes, you need to complete Form W-7 and send it to IRS.

AtlantaTaxExpert · Aug 18, 2010, 03:14 PM

You will also need a letter from the bank that cites your name, states that you are opening an account that will pay interest, and preferably with an account number. This letter must be attached to the W-7, along with a notarized photocopy of your passport picture page.

NomadGoddess · Aug 18, 2010, 10:51 PM

Thanks so much for all the advice! But why do nonresident aliens need an ITIN if they're not even liable for taxes in the US?

Does having an ITIN mean that he'll have to file for taxes(even if non were withheld) every April of the year? He only visits the US every June-August. :-/

wnhough · Aug 18, 2010, 11:56 PM

QUOTE," . . . But why do nonresident aliens need an ITIN if they're not even liable for taxes in the US?"---I guess the reason is that BECAUSE the US tax code says so!! As many tax experts or educators say, IRC, the US tax coe DOESN'T have to be logical or rational, but should be a CODE!! Why do they need a ITIN? Because the US Tax CODE says so!