any withholding for capital gain if no W-8BEN or W-9 on file for non-US (Cdn) selling US stock ?

Factual Questions
1

I plan to sell employee share plan stock in a US company, held by Computershare also in the US. I am a Canadian citizen and resident and do not file any US tax forms. I do NOT have a W-8BEN or W-9 on file with Computershare. In the process of selling these shares using their website, they give me this warning.

“Failure to complete and return the appropriate form, W-8BEN or W-9 to Computershare prior to placing a sale order request, will result in the maximum backup withholding rate of US federal income tax plus any applicable state taxes from the gross proceeds of your sale as required by law.”

I know that my dividend payouts have been subject to withholding, but I am not asking about dividend. Will there be any withholding from the sale of these shares ? My understanding is that there is no withholding on any capital gains – is that correct ? All sales were purchased more than a year ago, so there should be no

2

The backup withholding rate is 28% of the entire proceeds regardless of the holding period or your cost basis of the stock. If the actual tax due is less (and it probably is), you will get the difference when you file a tax return.

3

Why do you not have an W-8BEN on file? Do you realize that you’re paying twice the witholding tax on dividends that you should be?

4

Thanks for the replies but please note that I am not a US citizen and do not pay US taxes and do not file any US tax forms.

I believe your answers only apply to US taxpayers.

I see that my original post was cut off - I meant to add this link: Do Non-U.S. Citizens Pay Taxes on Money Earned Through a U.S. Internet Broker?
which says:

“If you fall under the non-resident alien category and the only business you have in the U.S. is in investments (stocks, mutual funds, commodities) within a U.S. dollar-denominated brokerage firm or other agent, you are subject to the following tax guidelines. In terms of capital gains, non-resident aliens are subject to no U.S. capital gains tax, and no money will be withheld by the brokerage firm.”

Both of the stated conditions apply to me:

  • non-resident alien
  • only business is investments in US dollar investments

Is this link accurate ?

re: dividends. As a Canadian citizen, US source dividends are considered regular income and so are taxed at my highest marginal tax rate (which is over 28%). I am able to claim a tax credit for the amount of the withholding so I do not see the benefit of filing a W8 (other than being able to delay paying these taxes for part of the year). But let’s not get off topic with dividends, I am asking about capital gains withholding.

thanks !

PS: from https://www.irs.gov/pub/irs-pdf/p519.pdf - chapter 4, “Sales or Exchanges
of Capital Assets” seems to say the same as the text above – no tax withholding for non-resident alien on capital gains.