# US tax - report dividends



## ukReturner (Mar 23, 2017)

I've returned to the UK(I'm a UK citizen) after working in the US.
I left some mutual funds in the US, and now find that I have to file form 1040NR to report dividends.
I have only just found out that I should have filed a W8BEN and so I only have the 1099 DIV form.
This shows Ordinary and Qualified dividends, but for a non resident alien the dividend section only shows different tax rates.
I have looked at the IRS tables for the UK and see that there are two rates, 15% and 5%, but cannot find any explanation of the difference between them.
Could anyone advise on how to fill the dividend entries on the 1040NR form?


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## JustLurking (Mar 25, 2015)

Assuming you are not also a US citizen, nor are you a green card holder or any other form of "US person for tax purposes"...

Your US tax rate will be 15%, non-recoverable. This page in HMRC's _Double Taxation Relief Manual_ shows why the 5% rate isn't for you.

You put your gross dividend on the 1040NR, Schedule NEC, line 1(a) in column (b). Follow through the 1040NR and you should find that you owe 15% of the dividend in US tax. You can claim up to this amount as a foreign tax credit on your UK return, but only if your UK tax liability on it exceeds 15%. Otherwise, you can only claim up to the amount the UK would tax you on it.

If you file a W-8BEN with your US bank/broker, they should in future a) apply 15% US tax withholding to US dividends (and 0% to interest), and b) send you a 1042-S form rather than a 1099. That way you won't have to file any 1040NR, because the withholding exactly matches your US tax liability. If you do still have to file a 1040NR for other reasons, you attach the 1042-S as proof of withholding. Of course, you can and should continue to claim this 15% withholding as a UK foreign tax credit.


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## ukReturner (Mar 23, 2017)

JustLurking said:


> Assuming you are not also a US citizen, nor are you a green card holder or any other form of "US person for tax purposes"...
> 
> Your US tax rate will be 15%, non-recoverable. *link removed* This page[/URL] in HMRC's _Double Taxation Relief Manual_ shows why the 5% rate isn't for you.
> 
> ...


Thanks very much for clearing this up.
So I can just ignore Qualified dividends.
I laboriously looked through a number of IRS publications to try and find out what the 15% and 5% rates meant but didn't find anything; is the information there and I just missed it?


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## ukReturner (Mar 23, 2017)

Thanks, JustLurking, for helping with this.
I posted a thank you reply a few days ago, but it hasn't been published.

I spent a long time going through IRS publications looking for information on the two different taxation rates for the UK, but couldn't find anything - do they not give such information, or did I just miss it?


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## Bevdeforges (Nov 16, 2007)

Not sure how I missed it, but apparently something in the system "triggered" an automatic hold on your post. It should be visible now.

To be honest, none of the IRS information gives much on any "foreign" tax rates or policies. In most cases they just tell you to "read the tax treaty" (and that's a real chore, no matter which treaty you're looking at). But the treaties, too, are pretty vague.
Cheers,
Bev


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## Moulard (Feb 3, 2017)

The Memorandum of Understanding or the Technical Explanation of the Treaty can be handy. I would suggest reading that in parallel. They tend to be written in Human rather than Legal.


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