What is the taxation of foreign dividends?

Foreign dividends are payments made by a foreign company to its shareholders, usually out of profits. In the state of California, foreign dividend income is subject to taxation by the Franchise Tax Board, the agency in charge of collecting and enforcing tax laws. Though the taxation of foreign dividends in California is similar to that of domestic dividends, there are some differences. Generally, foreign dividends are subject to California source income tax, which means that any foreign dividends received by a resident of California are subject to taxation. This taxation rate is the same as the rate for domestic dividends. In addition, foreign dividends are subject to federal taxation as well. Depending on a number of factors, federal taxes on foreign dividends could be either lower or higher than taxes on domestic dividends. Finally, certain foreign dividends may be subject to a withholding tax. This is a tax that is withheld by the foreign company before the dividend is paid to the shareholder. This amount can vary greatly, depending on the foreign country and the particular dividend payment. In conclusion, foreign dividends are subject to taxation by both the Federal Government and the State of California. Depending on the foreign country, these dividends may also be subject to withholding taxes.

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What is the taxation of foreign dividends?

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