US Withholding tax

Taxes
4

I read your post twice. It seems like two different things are going on

  1. they are talking about 30% deduction but I only see 15% in your post (761 CHF on dividends of 5085 CHF) Not sure why you claimed 761 + 761 twice?

  2. the first half is another topic and is explained below . The second half is most likely an error in filling the form. Could it be that you filled DA-1 incorrectly and asked for 761 + 761 = 1522 CHF in total? Normally when you use international broker, you need to uncheck a box. If you use Swiss broker then that box can stay unchecked.

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Only @jay can help you understand :slight_smile: based on this thread DA-1 Refund calculation - #2 by jay

My understanding is that you cannot take advantage of two things together

  • you first asked for deduction of 0.3% of the ETFs held at IBKR but
  • then you also asked for credit for Dividend tax which US took
  • tax office is just trying to find the fair number which makes sense to them.

Imagine you had 200 K USD VT at IB. You asked for 600 USD deduction for the costs of managing the security. Then you asked also for 600 USD credit for tax that was withheld. Total 600 USD reduced from taxable income and 600 USD credit for tax due. Let’s assume your marginal tax rate is 30%. This results in total saving of 600 x 30% + 600 = 780 USD. I think tax office will not give you 780 USD back. It would be something close to 600 USD. I just oversimplified but just trying to give a feeling of what’s happening. If you read the thread I linked, you will understand more detail

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P.S -: I think the ZH tax software terms can be misleading. There is a difference between

  • foreign tax WHT (this is what US withheld)
  • steuerruckbehalt USA ( this is what Swiss broker will withheld on top)

For first few times, I always entered the numbers in second section but tax office corrected them back to first section.

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