Although we may be an ocean or border apart, you're never too far from taxes. Below are common questions in regards to how profits or losses are handled so you can adequately file for taxes.
tastyworks does not provide tax advice. Please consult a tax professional to assist you with your specific tax inquiries.
Does tastyworks deduct taxes from profits made on stock or options trade?
In short, no. Trading P/L's can be determined using your Tax Worksheet and Year-to-Date Export file
Tastyworks does not deduct any gains made from stock, options, or futures trades since each country’s tax treatment from profits or losses from trading is different. That said, early to mid-February, we will provide a tax worksheet in the form of a CSV file (spreadsheet) of all of your trades made in the prior calendar year, as well as a year-to-date CSV file.
For example, if you need to determine your profit or loss on equities and equity options from April 2018 to March 2019, then it will require you to utilize your 2018 tax worksheet as well as your 2019 tax worksheet. However, if you need to determine your profit or loss on equities and equity options from February 2019 to January 2020, then you will use the 2019 tax worksheet as well as your 2020 Year-to-Date Export file.
The Tax Worksheet and Year-to-Date Export (CSV) files are made available in the Tax Center. Since international customers are not subject to U.S. Capital gains/loss rules, the Tax Worksheet and/or Year-to-Date Export file can help you determine your profit or loss, or P/L for short. For futures trades, please refer to your latest futures confirmation for the month ending you are reporting in.
My country does not assess taxes on money made from trading so why am I subject to tax withholding on dividends
Although you may not be subject to taxes on income made from trading, dividends are defined as a source income in the eyes of the U.S. tax code. Typically, a nonresident alien or foreign entity is subject to U.S. tax of 30% on its U.S. source income. A reduced rate, including any exemption, may apply if there is a tax treaty between your country of residence and the U.S. Important. Effective January 1, 2018, the IRS requires nonresident aliens and foreign entities to provide financial institutions with their Foreign Tax Identification Number (“FTIN”), or a reasonable explanation as to why the account owner does not have an FTIN, in order for their W-8 BEN to be valid for a payment of U.S. source income reportable on Form 1042-S. If an account does not have the account owner’s FTIN, the account will be subject to 30% withholding on all U.S. source income. For more information on tax withholding on U.S. source income, please visit IRS Publication 515 by clicking here.
Are capital gains from trading assessed the tax withholding rate similar to dividends?
Non-resident aliens are not subject to U.S. capital gains tax. In the eyes of the U.S. tax code, the 30% withholding amount is assessed on income. Yes, you may define a profit from a stock or options trade as income, but in the eyes of the IRS, a dividend is defined as income, and any gains made from trades is defined as capital gains. For more information on tax withholding on U.S. source income, please visit IRS Publication 515 by clicking here.
To read more about the withholding rate applied to your trading account, please click here.
To view other frequently asked topics, please visit our international account help section.