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adamadman
Level 2

Are my Dividends and Capital Gains earned from U.S. accounts and stocks all taxable to New York, where I am a nonresident? (I live in Germany)

I sold a few stocks for some profit (I think about $8000) and my bank account and stocks earned a little over $3000 in dividends. Must I pay taxes on the whole think in NYS?
5 Replies
ToddL99
Employee Tax Expert

Are my Dividends and Capital Gains earned from U.S. accounts and stocks all taxable to New York, where I am a nonresident? (I live in Germany)

It depends. What is your legal state (or country) of residence?

 

Unless you established legal residency in GE, then you are still a legal resident of a U.S. state; if that state was NY, all your income is subject to NY (and U.S.) tax.

 

"Living in Germany" does not mean you are a legal resident of Germany, unless you have met Germany's requirements to establish resident (the GE equivalent of a U.S green card).

 

 

What makes you a resident of a state (or country)?  

 

Generally, you're a resident of a state (or country) if you intend to either stay there permanently, or return there after a temporary absence. It's where home is – where you come back to after being away on vacation, business trip, overseas or out-of-state employment, or school. Many factors are considered, not the least of which are where you are registered to vote, own homestead property and are licensed to drive. 

 

 

 

 

adamadman
Level 2

Are my Dividends and Capital Gains earned from U.S. accounts and stocks all taxable to New York, where I am a nonresident? (I live in Germany)

I am a legal resident of Germany. I have lived abroad for 15 years now. However, NYS was my last legal residence and I vote in NY. 

 

I have paid tax in NY every year (H&R Block used to do my taxes) -- sometimes higher than federal! -- but this year I am using TurboTax and was not sure whether I should still be paying NY taxes on INT that is not from a NY bank or DIV from US stock sales. 

 

But I have NOT paid interest on income, only on DIV and INT from the States. The question is, do I still have to do this in NY, and either way, how do I reflect this properly in TurboTax.

ToddL99
Employee Tax Expert

Are my Dividends and Capital Gains earned from U.S. accounts and stocks all taxable to New York, where I am a nonresident? (I live in Germany)

If you are registered to vote in NY, then you are a resident of New York. As a resident of NY you are subject to NY tax on ALL your income, wherever it is earned. 

 

To register to vote in NY you must:

  • Be a United States citizen;
  • Be 18 years old by December 31 of the year in which you file this form (note: you must be 18 years old by the date of the general, primary or other election in which you want to vote);
  • Be a resident of this state and the county, city or village for at least 30 days before the election;
  • Not be in prison or on parole for a felony conviction (unless parolee pardoned or restored rights of citizenship);
  • Not be adjudged mentally incompetent by a court;
  • Not claim the right to vote elsewhere.

 

Also, n order to register to vote in New, you have to provide the New York address where you live, and are required to notify the local election board of any change in address.

 

See item 8 on New York State Voter Registration Form

adamadman
Level 2

Are my Dividends and Capital Gains earned from U.S. accounts and stocks all taxable to New York, where I am a nonresident? (I live in Germany)

That seems clear. Luckily, I am able to get the foreign income exclusion, or whatever it is called, and not pay tax on my salary (I believe this is because I don't earn enough and am not rich enough--I am just some expat schmo).

 

But you are saying I have to remain registered as a "resident" of NY, and not a "non-resident"? Is that right? The definitions provided on TurboTax seemed to indicate I was a non-resident. Because, again, I have not been in NY for many years. I would need to go back and change very much about my TurboTax return, no?

 

One more related question that might be something you would know about—and thank you for the benefit of your knowledge on all these issues. Here it is: Because my wife is German and from Germany and lives in Germany, and only worked a few years in the US (long enough to have a SSN, though), my tax preparers have always left her out of the equation -- her salary, her accounts. She has not filed a US return. We just reported MY numbers every year as "married filing separately." But this year it is asking me for her salary and how many dependents she will claim. Presumably, they want to make sure she and I are giving the same information. However, she is not filing. So what do I put in the fields? Zero? Or leave them blank? I tried putting "NRA" for non-resident alien, as advised here, but many fields cannot handle that info.   Thanks!

ToddL99
Employee Tax Expert

Are my Dividends and Capital Gains earned from U.S. accounts and stocks all taxable to New York, where I am a nonresident? (I live in Germany)

If you have legally established German residency, then you do not have to  remain registered as a "resident" of NY - just cancel your NY voter registration and identify yoursel f as a resident of a "Foreign or U.S. Possession" in the Personal Info interview of TurboTax.

 

Unless you renounce your U.S. citizenship, however, you continue to be subject to U.S. tax.

 

If you are filing as "married filing separately", your wife's salary (for U.S. tax purposes)  is zero ("0") and her dependents are also zero ("0"). They want to make sure that you aren't double-claiming dependents or misallocating family income. Since she is not filing a U.S. return and does not have any U.S. income, that is not an issue.

 

The only way you can properly identify her as a Non-Resident Alien (NRA), is to use a paper return and file by mail.

 

If there is no ITIN or SSN, then in any place where the nonresident spouse's taxpayer ID number is required on a tax form, you would take a black or blue pen and manually write "nonresident alien" or abbreviate as "NRA."  In the TurboTax software, you can input any "made up" SSN or ITIN you want to, in order get through the program (we suggest 999-88-9999, 999-88-9998 or 999-88-9987, as those numbers won’t produce any TurboTax program errors in a review check) as a temporary "placeholder.”  You can then later "white out" that number when the paper pages are printed.

 

 

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