Anonymous
Anonymous asked in Business & FinanceInvesting · 3 weeks ago

How are dividends in foreign (non-U.S.) ETF taxed?

I recently bought EMXC - a "foreign" emerging markets ETF - and it has a small dividend yield.  I know the U.S. taxes dividends, but would the foreign countries from which the hundreds of companies in my ETF also tax me separately each for dividends given to me?

Update:

Also, would it make a difference if that emerging markets ETF were in an IRA (whether traditional and/or ROTH)?  So confused about this!  HELP!  THANKS!!

Update 2:

Also, do you get taxed twice when you SELL the stock/ETF too??!!!  (on top of dividend taxes that is)

2 Answers

Relevance
  • 3 weeks ago

    You don't pay tax directly to the foreign countries.

    Many, perhaps all, of the foreign countries have a tax that is withheld from the dividends that the companies send to the ETF. Depending on how the ETF does its accounting, you will probably see this amount listed as "foreign taxes paid" on your 1099 and have the option to claim a credit on Form 1116 or a deduction on Schedule A.

  • martin
    Lv 7
    3 weeks ago

    If the foreign governments tax you, it can be a credit against the taxes you owe to the USA.

Still have questions? Get your answers by asking now.