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#3
01-20-2009, 09:41 PM
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 Re: Foreign tax paid on stock held in 401k account "My interest" <myinterest[at]gmail.com> wrote - quote - > What's the tax implication when I withdraw from my 401K at retirement? > For example, assuming a foreign stock paid $100 dividend and the > foreign government withheld $10 tax. If this stock is owned in my > regular investment account, I will pay US tax on $100 then get credit > for $10 foreign tax paid. But what will happen if this foreign stock > is held in 401K? Will the 401K brokerage be required track all such > details? (If so, I would image the information is very messy and > almost impossible to verify when you retire) Luckily you get the best of the best. Since you are taxed only on the distributions from the 401K, you get a full deduction for the foreign taxes paid - sorta - because you'll never include in your income the gross earnings of the 401K. Real simply, 401K contributions = $5,000 Earnings = $500 Less foreign taxes paid out - 25 --------- Full distribution = $ 5475 Taxable income = $ 5475 You effectively get an above-the-line deduction. -- Paul A. Thomas, CPA Watkinsville, Georgia -- << ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- > |
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#2
01-20-2009, 08:56 PM
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| Re: Foreign tax paid on stock held in 401k account My interest wrote: - quote - > What's the tax implication when I withdraw from my 401K at retirement?
Law of Taxes: "What happens in the 401k, stays in the 401k."> For example, assuming a foreign stock paid $100 dividend and the > foreign government withheld $10 tax. If this stock is owned in my > regular investment account, I will pay US tax on $100 then get credit > for $10 foreign tax paid. But what will happen if this foreign stock > is held in 401K? Will the 401K brokerage be required track all such > details? (If so, I would image the information is very messy and > almost impossible to verify when you retire) What the other two posters have mentioned is what I call the Las Vegas ChEAr$, Harlan Lunsford, EA n LA -- << ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- > |
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#1
01-20-2009, 07:36 PM
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| Re: Foreign tax paid on stock held in 401k account In misc.taxes.moderated, My interest wrote: - quote - > What's the tax implication when I withdraw from my 401K at retirement?
The good news is that it is not messy. The bad news is that the> For example, assuming a foreign stock paid $100 dividend and the > foreign government withheld $10 tax. If this stock is owned in my > regular investment account, I will pay US tax on $100 then get credit > for $10 foreign tax paid. But what will happen if this foreign stock > is held in 401K? Will the 401K brokerage be required track all such > details? (If so, I would image the information is very messy and > almost impossible to verify when you retire) foreign tax paid by your IRA or 401k is not deductible nor does it give you any credit. It is best to put that kind of investment in your non-tax-deferred account, if the tax total is substantial. -- << ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- > |
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01-20-2009, 07:34 PM
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| Re: Foreign tax paid on stock held in 401k account My interest <myinterest[at]gmail.com> wrote: - quote - > What's the tax implication when I withdraw from my 401K at retirement?
There is no benefit, so far as I know. Similarly, you can> For example, assuming a foreign stock paid $100 dividend and the > foreign government withheld $10 tax. If this stock is owned in my > regular investment account, I will pay US tax on $100 then get credit > for $10 foreign tax paid. But what will happen if this foreign stock > is held in 401K? Will the 401K brokerage be required track all such > details? (If so, I would image the information is very messy and > almost impossible to verify when you retire) hold tax-free munis, or state-tax-free Treasuries, in your 401(k) but you can never capture the tax free aspects. Or make any use of lower capital gains rates within the 401(k), etc. Steve -- << ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- > |
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#-1
01-20-2009, 06:30 PM
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| Foreign tax paid on stock held in 401k account What's the tax implication when I withdraw from my 401K at retirement? For example, assuming a foreign stock paid $100 dividend and the foreign government withheld $10 tax. If this stock is owned in my regular investment account, I will pay US tax on $100 then get credit for $10 foreign tax paid. But what will happen if this foreign stock is held in 401K? Will the 401K brokerage be required track all such details? (If so, I would image the information is very messy and almost impossible to verify when you retire) -- << ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- > |
| Tags |
| 401k, account, foreign, held, paid, stock, tax |
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