Withholding Taxes: Foreign Shareholders

Withholding Taxes: Foreign Shareholders

A withholding tax is an amount of income that a company withholds from an employee’s paycheck or from dividends paid to a foreign shareholder. The corporation pays the money withheld to the IRS directly, instead of to the employee or shareholder. This article will be limited to taxes withheld on nonresident investors’ dividends. For an overview of the different components of a distribution, including dividends, return of capital, and capital gains, read The ABC’s of...

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