What should I know about US capital gains tax as a Saudi who holds US citizenship?

US citizens are taxed on their worldwide income, including capital gains from investments, regardless of where they reside.

How are capital gains on stocks and shares taxed?

  • Short-Term Gains: Profits from shares held less than a year are taxed at your marginal tax rate.
  • Long-Term Gains: Profits from shares held over a year are taxed at a lower rate, typically around 20%, plus a potential 3.8% net investment income tax.

How are cryptocurrencies taxed?

Cryptocurrencies are taxed similarly to stocks. Keeping detailed records of purchase and sale dates is crucial for accurate tax reporting.

What about investments in mutual funds?

Non-US mutual funds are often classified as Passive Foreign Investment Companies (PFICs), requiring Form 8621. PFICs are subject to complex and potentially higher tax rates.

Why is professional advice recommended?

Consulting a tax professional experienced in expat tax issues is advisable to optimize your tax strategy and ensure compliance.

More about the Saudi guide