What you need to know about U.S. taxes.

As a general rule, foreign investors (i.e., non-U.S. citizens and residents) with no U.S. business are typically not obligated to file a U.S. tax return, including on income generated from U.S. capital gains on U.S. securities trades. Instead, when investing with Schwab as their broker-dealer, Schwab will withhold the required U.S. taxes on U.S. income and gross proceeds, as applicable, and pay the withheld tax and report to the IRS directly.

Foreign investors must continue to certify their non-U.S. citizen and resident status through submitting required documentation (ex: the applicable W-8 form) and may be able to receive reduced U.S. tax withholding by identifying the country where they claim to be a resident for income treaty purposes.

Schwab foreign investors who are non-U.S. residents and residents of a tax treaty country with a valid Form W-8 on file may be able to claim a reduced rate of withholding under an income tax treaty. Other foreign investors generally pay a flat 30% withholding tax on certain interest and dividend income from U.S. securities investments. As a withholding agent, Schwab is required to report interest and dividend income from U.S. securities to the IRS and to the client through Form 1042-S, or other applicable form.

Please see IRS Publication 515 for more information on tax rates applicable to non-residents.