I have shares in a family corporation and I’m considering selling them. If I sell and make 1,000,000, will I owe taxes when I bring the money into the USA? If taxes apply, how much should I expect to pay?
You owe taxes when you sell the shares, not when you bring the money into the US
The US taxes its citizens on worldwide income, so you will owe taxes on the sale of shares. For federal tax, it would be capital gains rate plus the net investment income tax.
Uma said:
The US taxes its citizens on worldwide income, so you will owe taxes on the sale of shares. For federal tax, it would be capital gains rate plus the net investment income tax.
What does capital gains rate mean?
Are you a US citizen, green-card holder, or resident alien?
Ori said:
Are you a US citizen, green-card holder, or resident alien?
I’m a US citizen
Then you need to report the sale of the shares on your US tax return for the year you sell them and pay any taxes due. Moving the money from the foreign country to the US won’t result in additional taxes.
Also, be aware that you need to file FBAR (FinCEN 114) and Form 8938 along with your tax return. Since you have shares in a foreign corporation, you might already know about these requirements as a US citizen who owns foreign assets: https://www.greenbacktaxservices.com/knowledge-center/foreign-business-tax-reporting/
Tax calculations and reporting may vary if the foreign corporation is considered a controlled foreign corporation.
It might be best to consult a CPA who specializes in situations like yours. Your filing status and the source of funds matter. It’s not a simple question if you are withholding info about your filing status or the source of the funds.
Monty said:
@Winslow
What do you mean by Source of Funds? How does that relate to my situation?
US sourced versus foreign sourced is how tax law categorizes these terms.
If you’re a US citizen, you need to pay taxes on all your income, whether it’s foreign or domestic.
You owe taxes when you sell on your personal tax return, regardless of whether you bring money into the US or not.
The US taxes its citizens and residents on their income no matter where it’s earned or received. Most tax rules are the same, but there are some exceptions, like the foreign earned income exclusion for Americans working abroad and benefits under tax treaties with other countries. You can find details in IRS Publication 54, Tax Guide for U.S. Citizens and Residents Abroad.
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