US tax witholding on old shares?

srt_3

Hi,
A while ago I had some US shares which I sold off in December 2010.
I received a notification from Halifax share dealing advising me they had informed the IRS of my investment etc and that I had a gross income of $10.00:cool:
Last of big time spenders me:)
The federal tax withheld was $3.00
Does anyone know how I am to pay this as I dont want to end up getting stiffed for tax avoidance and entry to US barred:(
Am I worrying unduly.
Thanks.
Stuart.

Theyarv1

call HFX share dealing and ask them, when you bought the shares you should have been asked to fill out a W-8BEN

JamesU

srt wrote: »

Hi,
A while ago I had some US shares which I sold off in December 2010.
I received a notification from Halifax share dealing advising me they had informed the IRS of my investment etc and that I had a gross income of $10.00. Last of big time spenders me. The federal tax withheld was $3.00. Does anyone know how I am to pay this as I dont want to end up getting stiffed for tax avoidance and entry to US barred. Am I worrying unduly. Thanks. Stuart.

Nothing here for you to be unduly worried about.

US witholding tax is 30% and taken from the dividend before it is paid out, and if US federal tax of $3 was withheld from the $10 income, then you have already paid what was due, no need to pay it again.

Depending on procedures in place at Halifax they may (or may not) provide a W-8BEN form and be prepared to submit this on your behalf so that 30% US witholding tax is reduced to 15% on share purchases. But that would have to be filled in via Halifax before share purchase, and not retrospectively, so this is not an issue either. However, if you intend to trade a lot in US markets and receive significant income in the future, worth considering setting up W-8BEN in conjuction with the provider you use.

JamesU

srt_3

Hi folks,
Thanks for the replies:)
I actually had completed a W8BEN sometime earlier when I purchased the shares with another broker (Selftrade or what they were last).
The shares were transfered to Halifax along with LSE shares some time ago.
I dont recall Halifax communications regarding the W8BEN:o
But it appears I dont need to do anything else then as I doubt I should want to purchase any US shares in foreseeable future:) ?
Thanks.
Stuart.

temagami

No, nothing more to do, withholding tax is already held and your liability is met as far as the IRS is concerned.

Unfortunately, you'd have needed to complete a W8BEN for Halifax as well - the Selftrade one wouldn't have travelled with the shares. And you have to complete a new one (for each account) every three years (which most brokers do not remind you of, in my experience).

That said, if I'm understanding your question correctly, there's probably been a small mistake here. Withholding tax on US dividends is 30%, reduced to 15% under the UK-US double taxation agreement (but you need to complete the W8BEN to get the deduction at source reduced to 15%). However, there should be no withholding tax (or capital gains tax due) on the proceeds of share sales anyway (generally - I'm sure there are specific odd situations where it might be).

Though possibly the brokers withhold tax on share sales as well if you don't have a W8BEN, just to keep things simple ...

You can reclaim the overpaid tax through the IRS, but for the amount involved you may not think it's worth dealing with their bureaucracy.

srt_3

Ok then:)
Thanks for the advice.
I will now relax about IRS chassing me

dtsazza

temagami wrote: »

That said, if I'm understanding your question correctly, there's probably been a small mistake here. Withholding tax on US dividends is 30%, reduced to 15% under the UK-US double taxation agreement (but you need to complete the W8BEN to get the deduction at source reduced to 15%). However, there should be no withholding tax (or capital gains tax due) on the proceeds of share sales anyway (generally - I'm sure there are specific odd situations where it might be).

I assumed this "income" was due to a dividend as opposed to selling shares - which would then explain why the WHT was applied.

xjessie007

srt wrote: »

Hi,
A while ago I had some US shares which I sold off in December 2010.
I received a notification from Halifax share dealing advising me they had informed the IRS of my investment etc and that I had a gross income of $10.00:cool:
Last of big time spenders me:)
The federal tax withheld was $3.00
Does anyone know how I am to pay this as I dont want to end up getting stiffed for tax avoidance and entry to US barred:(
Am I worrying unduly.
Thanks.
Stuart.

If the tax has already been witheld, then it has been witheld and you do not need to pay it again, no? Sure IRS won't bother you for 3 lausy dollars. 1,5 euro :rotfl: