Investments & PFIC in Colombia

Reporting Stocks, Securities, Mutual Funds, and Alternative Investments | U.S. Expats in Colombia

If you’re an expat that sold stocks, received dividends from stocks, owned mutual funds with capital gains distributions, or earned income from alternative investments, we can help you submit your reporting requirements for these forms of income.

No matter where you reside, if you made or lost money from stocks, securities, mutual funds, or any other type of investments or assets, you’ll need to report these gains and losses with your annual tax return.

For example, it is typical for U.S. taxpayers who own stocks, securities, mutual funds, or other alternative investments and earned $10 or more in dividends or distributions to receive a 1099-DIV. Maintaining a record of this is essential so you can complete your 1099-DIV reporting come tax time.

International Investments

Living in Colombia provides more opportunities to invest in more than just what the U.S. can offer. But keep in mind that even though you may not receive the same 1099-DIV as you would in the U.S. for these foreign investments, you must report your worldwide income, including any interest, dividends, distributions, or alternative investments received from abroad.

When calculating your income or losses, make sure to use an approved currency conversion method recognized by the IRS.

1099-DIV Reporting

Dividends are taxable income and the type of income or loss will determine which forms to complete. Just because you received a 1099-DIV doesn’t necessarily mean you owe any taxes. There may be deductions that can help offset the dividends collected, which is why it pays to work with an experienced tax professional.

When you receive your 1099-DIV, you’ll notice various boxes have numbers while others are empty. Some boxes to pay attention to are:

Box 1a: The total amount of ordinary dividends you received.

Box 1b: The portion of box 1a that’s considered to be qualified dividends.

Box 2a: The amount will be here if you have mutual funds that disburse a capital gain distribution.

Box 4: Any state or federal tax withholdings will be shown here.

Ordinary vs. Qualified Dividends

Qualified dividends are when a U.S. corporation pays the dividends, and you owned the stock for more than 60 days during a 121-day period that started 60 days before the ex-dividend date.

These kinds of dividends are taxed as long-term capital gains, so depending on your tax bracket, these dividends could be tax-free, or you’ll be taxed anywhere from 15%-20% based on your income.

Mutual Fund Distributions

Most mutual fund distributions will be treated like long-term capital gains, which is beneficial because the same rules apply for qualified dividends regarding taxation. The only difference is it doesn’t matter how long you have held the mutual fund.

foreign earned income exclusion and foreign tax credit for U.S. expats

Additional 1099-DIV Reporting Forms

If you received a 1099-DIV, you might also receive some other 1099-related tax forms:

1099-CAP: You have shares of a corporation that was acquired, or it had substantial changes in its capital structure that resulted in you receiving money, stocks, or property.

1099-INT: You earned more than $10 in interest from a bank account or brokerage

1099-OID: You purchased bonds, notes, etc., for less than the value at maturity.

1099-PATR: You received at least $10 in patronage dividends if you belong to a co-op.

1099-R: You received distributions from a pension, IRA/annuity, retirement plan, or a profit-sharing program.

Qualified dividends are when a U.S. corporation pays the dividends, and you owned the stock for more than 60 days during a 121-day period that started 60 days before the ex-dividend date.

These kinds of dividends are taxed as long-term capital gains, so depending on your tax bracket, these dividends could be tax-free, or you’ll be taxed anywhere from 15%-20% based on your income.

Schedule Forms For 1099-DIV Reporting

To accurately complete your 1099-DIV reporting, there are a few different tax forms you may need to complete. Some examples include:

Schedule B: Interest and Ordinary Dividends

If you received more than $1,500 in interest or dividends, most likely you will need to file a Schedule B.

Schedule B: Interest and Ordinary Dividends

If you received more than $1,500 in interest or dividends, most likely you will need to file a Schedule B.

Schedule D: Capital Gains and Losses

If you made or lost money from selling stocks, investments, or any other assets, you’ll need to complete Schedule D. You’ll need to share the date you purchased the stock or investment, the purchase price, and the date you sold the stock or investment and the selling price.

These details are important in order to determine if these were short-term or long-term assets. If they are considered long-term assets, you could be eligible for reduced tax rates.

No Matter Your Investment, USATax.co Helps Expats File With Confidence

If you own stocks, bonds, securities, mutual funds, or alternative investments, our team of experienced professionals will complete your reporting obligations along with other expat tax reporting requirements. Book a consultation to learn more about your exact reporting needs.

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