How does taxation of foreign dividends work?

In Washington, taxation of foreign dividends can be a bit complicated. Generally, foreign dividends are subject to taxation by the United States as ordinary income. This means that the same rates used to tax income in the US will be applied to foreign dividends. Additionally, foreign tax credits can sometimes be applied so that the foreign dividend is only taxed once. When foreign dividends are paid out from investments in US stocks, those dividends may be subject to the US tax rate, regardless of how the company is currently taxed. This is due to the fact that the dividends are paid out from an investment in a US company, and the US has jurisdiction over the investments made in its stocks. Investments in foreign stocks, however, are taxed differently. US citizens who hold investments in foreign stocks will not be taxed on the foreign dividend as long as the dividends are not remitted to the United States. Instead, foreign countries often tax the profits on their own, and the US will not be able to collect taxes on them. To sum it up, foreign dividends are taxed as ordinary income in the United States, while investments in foreign stocks can be subject to taxes in the country in which they are located. Additionally, foreign tax credits may be applied so that the foreign dividends are only taxed once.

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How does taxation of foreign dividends work?

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