Withholding Tax Puns

I have purchased around 500 shares of QYLD, and I noticed on the first income payment on 7/1/2022 that there is no withholding tax, Is this a one-off or is there something I'm missing because I'm paying 30% withholding tax on equity dividends (MSFT, ...) ??

Will my tax withholdings still be accurate even though my income is higher than what the jobs think it is? Does it make that much of a difference.

Details -

Single, no dependents

• J1 brings in 52k
• J2 brings in 40k

Should I adjust my withholdings or let employer do whatever they are already doing?

I live in a country where I have to pay the full 30% dividend withholding tax on US stocks, but on the upside we also have territorial taxation here.

I know that if I own a US stock which pays out dividends then my broker (IBKR) will withhold 30% of it on behalf of the IRS.

What happens if I own a US domiciled ETF which reinvests the dividend? Would the broker sell some of my shares in the ETF to cover the taxes, or how does that work?

Hello Zurich!

I have a question for which I haven't been able to find an answer on the web.l, at least not with my limited Deutsch.

In Zurich canton, quellensteuer for permit B holders is calculated monthly. The tarif table even uses the monthly gross.

It happens that a sizeable part of my only work comes as a bonus paid in two big chunks, and those months I've paid a way higher total tax rate. If the same amount was spread over 12 months I'd have paid less.

With the bonus I am over the 120k limit, but for 2021 it would be the first time I do the additional tax declaration so not sure what to expect.

So the question is if anyone has been in the same situation and if:

• Is it possible to recover this additional tax paid? If so do I need to take some special steps?
• If not, is there maybe a way this can be approached for the next year?

Thanks!

Long story short, I'm an idiot. I switched jobs exactly halfway through 2021, and somehow I managed to check the exemption box when filling out W-4 on my new employer's online portal. I should've noticed when I was getting more money than I should've, but as I said, I'm an idiot.

I just noticed when I was checking my paystub online and saw it says zero on the amount withheld.

I realize that I'll have to pay what I owe when I file my tax return but looks like I'm paying a penalty as well: "Generally, most taxpayers will avoid this penalty if they either owe less than $1,000, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller"

I'm filing single with no exemptions, I made ~30k in the second 6 months of 2021, so I owe more than $1,000 as it stands now.

And I made ~28k in the first 6 months and its taxes are withheld for this period, but the amount of tax in 2020 is just a little bit over what it's currently withheld for 2021.

I noticed that you can make quarterly payments for estimated tax, so can I just make an estimated tax payment for this past quarter before the deadline (Jan 18)? and this way the amount of paid estimated tax and total withholding will be over 100% of 2020 tax, and when I file my taxes for 2021 I'll just pay what I owe for the remaining quarter without any penalty.

Is my thought process correct, or is there something I'm missing?

Anyone hold ZIM (Shipping company gushing tons of free cash flow). It is domiciled in Israel. I hold in my RRSP. The lastest 2.50 (USD) dividend had 25% withheld on it - as well as the previous one. Just wondering if anyone was able to do a tax filing to reclaim some or all of this. If you don't know about ZIM check it out on SA. Lots of articles on it. I've been selling CCs on my shares and collecting very fat dividends as well. Cheers and TIA.

• ZIM has a $2.5 dividend
• Ex-dividend date is tomorrow, 12/15/21
• Israel is charging a 25% tax on this dividend, which will be withheld automatically
• Special ruling was passed about this: https://www.prnewswire.com/news-releases/zim-updates-on-withholding-tax-procedures-on-a-december-2021-cash-dividend-301434916.html
• Deadline for applying for the "Reduced Tax Withholding Rate' is January 7

I read through the ruling, for all the good that did me. My basic understanding is that the US has a tax treaty with Israel, and because of this we're eligible for... some kind of rebate on that tax? No idea, doesn't actually specify how much, from what I can see.

I've seen elsewhere in post comments that we can just allow the regular 25% tax, and write off that tax in our regular US taxes, but I'm also not clear on if this is true or how this would be handled.

I'd talk to my accountant, but I don't have one... can anyone here point me in the right direction? What are yall doing about this? Taking the tax hit and doing nothing? Applying for the special rate? Writing off against US taxes?

Dear Workers in America,

If you're getting an income tax return then that means you overpaid your taxes over the previous year and are getting back that overpaid amount. It's not a bonus or a gift from Uncle Sam. It is your money that you handed over to the federal government and they're just returning it.

You can adjust the amount that gets withheld for taxes from your paycheck. This will increase your take home pay and ideally your income tax return will be zero, meaning you don't overpay in taxes. It is easy to adjust. Most of you working at big companies can do it online on the employee portal, perhaps the ADP website, or just talk to your HR.

-A guy who doesn't want you to overpay taxes and then get them back.

I make 70-75k a year and my wife makes about 40k from our 9-5’s. We both withhold as single. If we both changed to withhold as married filing jointly, would we see a substantial increase in our net pay per monthly pay check?

I'm really confused and was wondering if someone could clarify this. Perhaps they have been in a similar situation. I have just opened an S&S ISA with H&L. I am a dual UK/US Citizen who has lived in the UK my whole life, I pay and file tax but have never owed US Tax due to double taxation treaties and my salary not meeting the US threshold. I am looking to invest some of my savings but have been told that I am not eligible for reduced tax on US Income.

They have told that "The IRS defines anyone with a tax liability in the US as a US person. This will include residents of the US and anyone that has worked in the US in the last tax year. If you’re not sure of your status, please check with the US authorities.

Clients classed as US persons aren’t eligible for reduced tax on US income and will be subject to the full 30% withholding tax on US income and 25% for Canadian income."

However, I checked the IRS website and they state "A payee is subject to withholding only if it is a foreign person. A foreign person includes a nonresident alien individual, foreign corporation, foreign partnership, foreign trust, foreign estate, and any other person that is not a U.S. person. It also includes a foreign branch of a U.S. financial institution if the foreign branch is a qualified intermediary. In most cases, the U.S. branch of a foreign corporation or partnership is treated as a foreign person."

They then state that a "U.S. person is A citizen or resident of the United States."

From my understanding, that means that according to the IRS I am not liable to pay withholding tax. Why is H&L saying that I am? Are they allowed to?

Thanks so much in advance.

Yesterday, I had my yearly portfolio research day. I dug a bit into a rabbit hole however when I discovered that the Total Expense Ratio (or TER) did not mean what I thought it meant.

The TER is how much a fund extracts each year to provide for itself in fees. The important thing is that is not the only way the fund is going to differ from the underlying index. For one thing, i.e. iShares are loaning out securities and have a lending bonus.

Therefore, from an investor's perspective, it might be more valuable to look at the tracking difference rather than the TER. How do these funds perform compared to the index they want to track? (These indices are often provided by either MSCI or FTSE.) And when you look at that, you can see that this tracking error for many large funds, is actually considerably larger than the TER (e.g. -0.06% for IWDA, 0.11% for EMIM and -0.04% for VWRL). Therefore, the TER should be more considered a marketing term, not really something to compare funds with.

But as you can see, some funds outperform their index! That is actually suspicious, and you might want to avoid this, as presumably this happens by incurring some extra risk. For this, there is the tracking variance, also confusingly called the tracking error. This number is actually really low for most of the popular passive index funds. (Which is good)

But, how do these funds actually manage to outperform the index? Some digging led me to this post, which I think has the right answer: https://www.reddit.com/r/eupersonalfinance/comments/ll4ean/the_secret_behind_vwces_022_ter_why_its_not_its/gnoe4e2/ In short, there is some subtle "cheating" in the index itself, with respect to how internal taxes on dividend are treated. When based in Ireland, funds actually manage to have a lower tax rate on dividends than the one used by the index! This small edge is what gives them the possibility to get rid of all their costs and even a little more. Therefore they manage to track the index really well, and even outperform it. But, only because the index is kind of wrong.

So now I wonder:

• Does someone have a comparison to how the popular index funds compare to their gross index (rather than the net index)? After all, I want them to track the global economy, and would like to be aware of where I lose performance, even if it is because of tax. I would like to have a fair comparison to investing myself in those stocks, versus using a fund.

• Are there any world index funds that ignore

For the nerds like me who want to calculate what their take home will be ahead of time, the IRS has finally released the detailed (weekly, biweekly, etc.) tables as an Excel attachment to the draft version of Publication 15-T for 2022: https://www.irs.gov/pub/irs-dft/p15t--dft.pdf

Get your spreadsheets ready!

Update: It looks like IRS updated the doc after my original post and added the full text of the draft but did NOT update the actual tables within it (SMH). The spreadsheet with the new values for all the tables is still attached to the new draft PDF though. Click the paperclip icon in the left margin and open the Excel file. Use those tables, not the ones in the text of the PDF.

ETA: If you open it in Chrome rather than downloading to your system, click the paperclip on the left side to access the attachment.

Hello,
So I live in Madison heights, and work at a office in Detroit. However, due to Covid I work from home. Recently I got to know that I should not be paying Detroit city tax ( 2%), rather should be paying non resident tax ( 1.2%). This is because I am not a Detroit resident even tho my office is in Detroit. I wanted to know if this is true, and if it is then how can I reclaim the 0.8% that I have been paying so far ?

Also one more thing, is it true we can ask for full refund for the city tax if we are 100 % work from home?

Hello.

I have a query for non US-residents, who subminted W-8EN form and got paid by North Shore Global Uranium Mining ETF (URNM) a distribution of $4.82 on 12/31/2021.

I was expecting to get a 15% withholding tax (submitted W-8EN), but got smacked with 30% rate. I asked on tavern and somebody said for him rate also was 30%.

I wonder how widespread it is or if anybody from abroad actually was taxed at 15%. I also asked my broker about (DIF Broker) and he is looking into it, but I got no explanation yet. I hope somebody enlighten me.

Thanks in advance for responses.

So far I've only invested in Canadian ETFs with all Canadian holdings. I understand that investing in US stocks will have a withholding tax. However, if I have a Canadian ETF that has US holdings, would it be subjected to the withholding tax?

I'm using a non-registered account so is it 30% withholding on both dividends and capital gains?

Hey Sales, looking for some reassurance. Facing a big tax bill this next tax season because my company withheld federal income tax on my commission payouts at a much lower percentage (like 20%) than I needed them to. I didn't do anything unusual on my W4, just selected standard withholding.

Do your companies withhold a higher-than-normal percentage on your commission payouts? Less than normal?

Hi PF!

I noticed my December paycheck was unexpectedly low, so I checked the paystub. The usual withholdings looked correct, with an exception - a new withholding line item for the company's HQ state where I don't work at. This amount is $3K.

I suspect an HRIS data issue, as my work location was briefly listed as that state during the year, 12 hours drive away.

Since it's the last calendar day, I am not sure if the employer would be able to do anything about it?

Guessing I'd want to file early and claim all of it back from that state?

Would like some feedback on adjusting withholdings for property tax and the interest. Ultimately my goal is to just break even during tax season and use the withholdings toward monthly mortgage payments.

Hi!

May I ask what is the problem of this? AP Period is open and GL Period is already open. Thank you.

Update: I believe I've discovered the issue, please see my update comment below if interested.

Hello,

I recently started a new job at a much higher pay. I've used the Neuvoo tax calculator in the past and it has been accurate. However, since starting this new job I've noticed my paystubs are smaller (higher withholding) than I was expecting based on the calculator.

• I make 125k in Ontario
• I listed my federal personal exemption at the current 2021 amount of $13,808.
• Neuvoo estimates my total tax at 30.4%.
• My paystubs list the tax rate at 34.29%.

I am trying to understand why the discrepancy? And if I am possibly over withholding?

I do understand that if I am overpaying I will receive the money back come tax time. If I am likely overpaying, how do I adjust my withholding to take less? I would be fine with paying a small amount come tax time versus letting the CRA hold my money all year.

Thanks everyone & happy holidays

My dad (US citizen) does not live in the US and wants to take withdrawals from his IRA account. His mailing address is an NC address in the US (where I live) and so the tax withholding is giving an option to withhold anything from 0% up (with the default for NC set to 4%). Same for federal (with a default set to 10%).

Since he won't owe any state taxes and won't be filing a state tax return is it okay to withhold 0 for that? Will the IRS send any tax forms to the state- and make things complicated for him when filing returns. Or only federal?

Hey y'all. I won $10,500 in April from a competition for a certain large YouTuber. I am going to be receiving a 1099-misc from their company, and I received the funds in April via direct deposit with no tax withholdings.

I think I may have messed up, though. I didn't pay any taxes immediately or do a withholding through the IRS (not sure if this is how it's even done). I do have money saved to pay for the taxes on the earnings, I just wasn't aware that I might have to pay early to prevent the underpayment penalty for taxes.

Did I mess up? What steps should I take to make sure the IRS doesn't kill me?

For reference, I also have a W2 job from which I take the standard deduction. I expect some money back in a refund typically, so I'm not sure if that will mitigate the underpayment penalty in any way.

Thanks!

My dad (US citizen) does not live in the US and wants to take withdrawals from his IRA account. His mailing address is an NC address in the US (where I live) and so the tax withholding is giving an option to withhold anything from 0% up (with the default for NC set to 4%). Same for federal (with a default set to 10%).

Since he won't owe any state taxes and won't be filing a state tax return is it okay to withhold 0 for that? Will the IRS send any tax forms to the state- and make things complicated for him when filing returns. Or only federal?