Foreign tax on dividends?

Withholdings are not paid taxes.

Did you have an obligation to pay taxes on the dividends earned? Surprisingly, most people find that the withholdings exceed the requirements and they are then not entitled to claim the full withholdings as a result.

To the moderator: Thanks, that's what I wanted to know.

To parrisbraeside: I don't understand your comments. Could you explain a little more?

As a practical matter, if I own shares in a foreign company or a mutual fund which invests in foreign companies, and send you a form 1099-DIV showing foreign tax paid in box 6 (that is what the IRS prints on form 1099DIV) I am not aware of any problem claiming the amount.

OP said witheld, but I suspect that OP received a 1099-DIV with an entry in box 6.

A common error when dealing with international tax issues is a tendency to treat or call the taxes withheld from income earned in another country as taxes paid. They may be taxes paid but you have to verify with both the treaty for that other country and the tax return for the other country if they are actually paid.

For example, if you have a capital gains transaction in the US while you are not a US citizen, or resident, you will be issued a 1042S or its equivalent showing that there was taxes withheld from the transaction at either 15% or 30% (generally, it would be the higher percentage.) Those taxes may be returned to you by filing a 1040NR return with the IRS. However, if you were a Canadian Citizen and resident and able to claim the benefits of the Canada-US Tax Convention, you may apply at your brokerage to have withholding stopped by filing a Beneficial Ownership Certificate (W8-BEN) and pointing out that the Treaty does not require the withholding.

So, if you forgot the W8-BEN, you would have withholding of taxes but no taxes payable. That is why I always harp on the difference between the two.

Alternatively, you may find that filing the foreign tax return would require additional taxes to be paid, over and above the taxes withheld. The taxes withheld are, per treaty, the maximum payable (but not the minimum) so generally you can forgo the filing of the foreign tax return and take the withholdings as payable. (Generally... remember that a foreign country may still require a tax return filed even with the withholdings. Example: Selling of real property by a non- resident/citizen generally requires a tax return filed, no matter what country, even though the tax payable may be larger, you generally have to make a statement then to refer to the treaty.)

However, as pointed out by someone else, a US tax slips such as a 1099 which mentions foreign tax paid, is tax payable. The original posting did not indicate that this was a US tax slip and generally the type of taxing transactions I deal with do not have US tax slips. Just original transaction documents or brokerage statements.