spamdetector
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For simplicity, let's assume the USD/JPY exchange rate is constant, and interest is distributed at the end of the year. (I am not a US national.)
I buy $100 of a bond ETF with a 10% yield on January 1st.
At the end of the year, I receive $10 in dividends.
According to my Japanese broker, the withheld taxes are as follows:
(or 28%)
How do I calculate these credits?
I buy $100 of a bond ETF with a 10% yield on January 1st.
At the end of the year, I receive $10 in dividends.
According to my Japanese broker, the withheld taxes are as follows:
- US tax withholding:
Code:
10% * $10 = $1
- JP income tax withholding:
Code:
15% * $9 = $1.35
- JP local tax withholding:
Code:
5% * $9 = $0.45
Code:
$1 + $1.35 + $0.45 = $2.80
How do I calculate these credits?
- A. It is the amount of US tax withheld:
Code:
$1 (Effective tax: (1.35 + 0.45)/10 = 18.0%)
- B. It is the difference between the amount of taxes I should have paid in Japan, and what I actually paid:
Code:
$2.80 - $2 = $0.80 (Effective tax: 20%)
- C. I can reclaim this money from the US government, and pay the difference between what was withheld and what should have been paid to achieve 20% in taxes:
Code:
$2.80 - $1 - $2 = -$0.20 (Effective tax: 20%)
- D. It is the amount of US tax withheld
Code:
$1
Code:$0.20