International Stocks & Taxes

[firehawkocean]

I am in the 33% tax bracket federally.

Was wondering how the Vanguard International Stock Index Fund (VGTSX)is taxed and whether I would be better of using a tax managed international fund?

Thanks

[Retired To Win]

I know I'm not actually answering your question, but this will be in the general topic area.

All my investing is in dividend-paying stocks in an IRA, which I've discussed in my saving advice blog (http://www.retired-to-win.savingadvice.com). I found out the hard way that some countries withhold taxes on dividend payouts even for IRA accounts. And as far as I know thare's no way to recover that withheld money. So I've learned for international stocks to always check the withholding policy for the company's base country. Often it's zero. But sometimes it's 25% or more. And that totally resets what the REAL dividend yield is for a company.

I wouldn't be surprised if some of your money in that international stock fund is getting sucked away in that or a similar manner.

[Petunia 100]

I know I'm not actually answering your question, but this will be in the general topic area.

All my investing is in dividend-paying stocks in an IRA, which I've discussed in my saving advice blog (http://www.retired-to-win.savingadvice.com). I found out the hard way that some countries withhold taxes on dividend payouts even for IRA accounts. And as far as I know thare's no way to recover that withheld money. So I've learned for international stocks to always check the withholding policy for the company's base country. Often it's zero. But sometimes it's 25% or more. And that totally resets what the REAL dividend yield is for a company.

I wouldn't be surprised if some of your money in that international stock fund is getting sucked away in that or a similar manner.

If the foreign tax withheld on an investment is in a taxable account, you claim the foreign tax credit. If it was in a tax-advantaged account, you just take the loss.

[Karl22]

The Vanguard Total International Stock Index Fund presents services both in mutual fund (VGTSX, VTIAX) and an ETF (VXUS). Spanning all shares categories, there is at present an estimated $90 billion dollars invested in this fund, sealing its place top 10 largest funds worldwide. It is truly a broad portfolio in just one fund. Taxing is commendable, Benchmark returns are shifted for withholding taxes.