Here's my question: why are you not simply opening up an account with a broker in your home country that offers access to the broad index funds, Irish-domiciled or not, that you want? I cannot see any advantage - but I can think of many disadvantages - with investing through a U.S. broker if you are not U.S. tax resident.
It appears that the G4 visa is one of those examples where your working days do not count as actual days for the purpose of the Substantial Presence Test, which ordinarily would make you a resident alien within your first year of working in the U.S., but in your case does not. However, it also seems that special rules surrounding the taxation of worldwide capital gains do apply to G4 visa holders, which is a little strange. Ordinarily, if you were non-resident for tax purposes, there should be no taxation on capital gains.
I think this is one of those situations where it might be to your benefit to schedule a phone consultation, even if you have to pay for it, with a law/tax group that specializes in G4 taxation and ask them your questions. For example, it's not clear if holders of a G4 visa would need to file FBARs. Not filing FBAR could result in very onerous penalties.
And to answer your question about the 15%/30% withholding based on the Boglehead Wiki quote that you cited. One way to think about it is that you are "treaty shopping." Ordinarily, residents of a non-treaty country experience a tax witholding of 30% with respect to any U.S.-sourced dividends. Since dividends are not usually classified as effectively connected income, non-treaty non-resident aliens also usually have a tax liability of a flat 30%. Since the withholding matches the liability, usually no filing or no tax payment (assuming no other source of U.S. income) is required.
But what people can do is buy into ETFs that are domiciled in countries with more favorable treaties with the United States, Ireland being one of them. Article 10 of the U.S.-Ireland tax treaty provides for preferential rates of taxation on dividends. So then the only question remains is what taxes are due between Ireland and your home country, and my guess is that it would be none. So it's a roundabout way of shopping for the best rates that apply. Theoretically, if you could find an ETF that's domiciled in a country with a 0% treaty rate on U.S. source income, and that amazing country in turn also has a 0% rate with your home country, you would pay no taxes. This works if you are a non-resident alien because you are only taxed on U.S. sourced income; if you were a U.S. resident for tax purposes, this would not work because all income, regardless of source, is subject to U.S. taxation.
To summarize: Were I in your situation, I would pay the money for 30 minutes or 1 hour of advice to a firm that specializes in taxation issues for G4 visa holders. They may alert you to pitfalls you are not aware of. Some questions to ask: Are worldwide capital gains for G4 visa holders taxable? Do you need to file an FBAR? Are you using the 1040 or 1040NR form? If you are using the 1040-NR form, why would non US sourced capital gains be taxable (if so), and on what line would they appear?
My hunch is that you are making things unnecessarily complex by going through a U.S. broker. Where possible, avoid the United States if you are not a U.S. citizen because it introduces a host of tax reporting/filing/change of status requirements that you can easily be unaware of.
It appears that the G4 visa is one of those examples where your working days do not count as actual days for the purpose of the Substantial Presence Test, which ordinarily would make you a resident alien within your first year of working in the U.S., but in your case does not. However, it also seems that special rules surrounding the taxation of worldwide capital gains do apply to G4 visa holders, which is a little strange. Ordinarily, if you were non-resident for tax purposes, there should be no taxation on capital gains.
I think this is one of those situations where it might be to your benefit to schedule a phone consultation, even if you have to pay for it, with a law/tax group that specializes in G4 taxation and ask them your questions. For example, it's not clear if holders of a G4 visa would need to file FBARs. Not filing FBAR could result in very onerous penalties.
And to answer your question about the 15%/30% withholding based on the Boglehead Wiki quote that you cited. One way to think about it is that you are "treaty shopping." Ordinarily, residents of a non-treaty country experience a tax witholding of 30% with respect to any U.S.-sourced dividends. Since dividends are not usually classified as effectively connected income, non-treaty non-resident aliens also usually have a tax liability of a flat 30%. Since the withholding matches the liability, usually no filing or no tax payment (assuming no other source of U.S. income) is required.
But what people can do is buy into ETFs that are domiciled in countries with more favorable treaties with the United States, Ireland being one of them. Article 10 of the U.S.-Ireland tax treaty provides for preferential rates of taxation on dividends. So then the only question remains is what taxes are due between Ireland and your home country, and my guess is that it would be none. So it's a roundabout way of shopping for the best rates that apply. Theoretically, if you could find an ETF that's domiciled in a country with a 0% treaty rate on U.S. source income, and that amazing country in turn also has a 0% rate with your home country, you would pay no taxes. This works if you are a non-resident alien because you are only taxed on U.S. sourced income; if you were a U.S. resident for tax purposes, this would not work because all income, regardless of source, is subject to U.S. taxation.
To summarize: Were I in your situation, I would pay the money for 30 minutes or 1 hour of advice to a firm that specializes in taxation issues for G4 visa holders. They may alert you to pitfalls you are not aware of. Some questions to ask: Are worldwide capital gains for G4 visa holders taxable? Do you need to file an FBAR? Are you using the 1040 or 1040NR form? If you are using the 1040-NR form, why would non US sourced capital gains be taxable (if so), and on what line would they appear?
My hunch is that you are making things unnecessarily complex by going through a U.S. broker. Where possible, avoid the United States if you are not a U.S. citizen because it introduces a host of tax reporting/filing/change of status requirements that you can easily be unaware of.
Statistics: Posted by Caduceus — Sat Feb 22, 2025 12:47 am — Replies 24 — Views 2996