Are short term capital gains taxed for Non-Residents? If yes what is the rate at which it is taxed?

[nikhilshetty007]

- I own stocks which I have held for less than a year.
- I want to book profits on those stocks. If Non Residents dont need to pay taxes on Capital Gains I want to book profits now.
- If taxes on capital gains are high for non residents (30%) I would wait for a few days and sell in Jan 2021. I will be having a residency status in 2021.

[Anonymous_]

Generally, if you are a resident of another state, the answer is "No", but more details regarding the transaction are needed.

Typically if a nonresident sells real property or tangible personal property located in a particular state, any gain from the sale is taxable in that state (i.e., the gain is income sourced in that state). The same result does not generally obtain with respect to intangible property.

States can tax income sourced in their state only to the extent that the property is employed in a business, trade, profession, or occupation carried on in that state.

[Opus 17]

US resident?  Are you a non-resident alien?

Firstly, if you are a non-resident alien for 2020, you can't use Turbotax.  Turbotax partners with Sprintax for NRA returns, or you can use a different provider.

As a US resident, short term capital gains (held one year or less) are taxed as ordinary income (15%-36% depending on your total income), and long term capital gains (held more than one year) are taxed at a reduced rate of 15% or 20%. 

As a non-resident, you owe US income tax on US-sourced income.  As a resident, you owe US tax on all your world-wide income, although you get a credit for foreign taxes paid.

If these are non-US assets, you will want to sell them before you become a resident, unless your foreign tax rate is higher than the US tax rate for capital gains.  If they are US assets, you will pay US tax on your gain, there is certainly no exemption for non-residents.  In fact, the stockbroker may be required to send 30% of the proceeds to the IRS as mandatory withholding, when the seller is a non-resident alien, and the only way to get that withholding back is to file a tax return; if it shows you owe less tax than the mandatory withholding, you get the difference refunded to you.  If these are US assets, you will pay less tax if you hold them at least 366 days.