Can I open a brokerage account if I am not a US citizen?

Wells Fargo Brokerage Account?

• I'm a bit new to trading stocks (although doing quite well), but am unclear about how a couple things work. When and where are the funds in my brokerage account taxable? I asked a very unhelpful Wells Fargo brokerage person this once, and he said if I transfer any funds out of the brokerage account, they'll be taxed. I asked how much, and he said it depended on several factors, and calling the IRS was the only way to find out. I opened a small account with Scottrade to get better resources than WF's sluggish trading interface, and they say that's not true. There's no tax on taking funds out of that particular brokerage account, but they must be reported normally with tax forms I'll receive. Who's right here? Will I be taxed for taking money out of my brokerage account, or can I move funds in and out freely? What kind of taxes will I be looking at on stock trades, percentage-wise?

• Answer:

  Assuming you are talking about a taxable account, your Wells contact was mistaken. Movements of cash into and out of the brokerage account are not taxable. The earnings on the investments that you generate inside the account are taxable. E.g. you buy 100 shares of stock at $1 and sell it for $2. The $100 profit is taxed. If you hold the investment for 1 year or longer the tax is currently at 15% capital gains rate. Dividends and interest that you earn on any holdings in the account are also taxable. At the end of the year you should get a consolidated 1099 that shows you the breakdown of all your reportable transactions. You should keep track of cost of each item for long term/short term gains as some brokers do not provide this breakdown. Good luck!