A foreign national can invest in almost every U.S. asset class — stocks, bonds, real estate, private businesses — without being a citizen or a resident. What determines whether investing in the U.S. as a foreigner goes smoothly is the paperwork you file before you start and the tax category each type of income falls into. Some income is withheld at a flat 30%. Some drops to 15% or lower under a tax treaty. Capital gains on stocks are usually not taxed at all. Real estate sales are taxed no matter what. And an estate tax exemption of only $60,000 can turn a routine U.S. stock portfolio into a serious problem for your heirs. Sort out the rules first, then invest.
Get Your IRS Paperwork in Order First
Two IRS documents do most of the work.
The first is an Individual Taxpayer Identification Number (ITIN), a nine-digit number the IRS issues to people who need a U.S. taxpayer ID but aren’t eligible for a Social Security number.1Internal Revenue Service. Individual Taxpayer Identification Number (ITIN) You apply by submitting Form W-7 to the IRS by mail or through an IRS-authorized acceptance agent, along with original documents or certified copies proving both identity and foreign status. A valid foreign passport is the only single document that satisfies both requirements; without one, you’ll need two separate documents.2Internal Revenue Service. ITIN Supporting Documents
ITINs expire. If you don’t use yours on a federal tax return for three consecutive tax years, it expires on December 31 after that third year, and you’ll have to renew before filing again or claiming treaty benefits.3Internal Revenue Service. How to Renew an ITIN
The second is Form W-8BEN, which you give to your brokerage or any other payer of U.S.-source income.4Internal Revenue Service. About Form W-8 BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) It certifies that you are not a U.S. person and lets you claim a reduced withholding rate if a treaty applies between your home country and the United States. You provide legal name, country of citizenship, permanent address, and date of birth.5Internal Revenue Service. Form W-8BEN (Rev. October 2021) Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) Skip it or fill it out wrong, and your brokerage withholds at the full 30% on every payment regardless of what any treaty says.
On top of the IRS forms, every U.S. financial institution runs identity checks under federal anti-money laundering rules.6FINRA.org. Anti-Money Laundering (AML) Expect to submit a scanned passport, proof of your home address (utility bill or bank statement), and sometimes documentation showing the source of your investment funds. Non-English documents usually need certified translations.
Opening a U.S. Brokerage Account
Several large U.S. brokerages offer accounts for non-residents, sometimes marketed as “international” or “global” accounts. You apply online and upload your passport, completed W-8BEN, and any additional documents the firm asks for. Verification typically takes a few business days to a couple of weeks, and the compliance team may follow up with questions about the source of your funds.
Once approved, you fund the account by SWIFT international wire transfer, using the receiving bank’s identifier code and account details the brokerage gives you. Wires generally settle in one to five business days. Many platforms let you hold multiple currencies, but buying U.S. stocks and bonds requires converting to dollars at the prevailing exchange rate. When the cash clears, you can trade immediately.
What You Can Buy — and the One Thing You Can’t
The menu is nearly identical to what a U.S. citizen sees. You can buy shares on the New York Stock Exchange and NASDAQ with no ownership cap. You can buy U.S. Treasury securities from four-week bills through 30-year bonds, all backed by the full faith and credit of the federal government.7TreasuryDirect. About Treasury Marketable Securities Corporate bonds, ETFs, and mutual funds are open to you. You can own residential and commercial real estate anywhere in the country, directly or through a holding company. You can also form or invest in a U.S. business, and both C-corporations and LLCs allow 100% foreign ownership. Private equity and venture capital funds accept foreign limited partners.
The one structure closed to you is the S-corporation. Federal tax law prohibits any corporation with a nonresident alien shareholder from electing S-corp status.8Office of the Law Revision Counsel. 26 U.S. Code 1361 – S Corporation Defined If you’re setting up a business here, it will be a C-corp or LLC.
How Your Investment Income Gets Taxed
The 30% Withholding on Dividends and Similar Income
The tax that catches most foreign investors off guard is a flat 30% withholding on what the IRS labels “fixed, determinable, annual, or periodical” income: dividends, rental income, royalties, annuities, and certain interest.9Internal Revenue Service. Fixed, Determinable, Annual, or Periodical (FDAP) Income Your brokerage or tenant withholds it at the source before you ever see the money.10Office of the Law Revision Counsel. 26 USC 871 – Tax on Nonresident Alien Individuals
If your country has a tax treaty with the United States, the rate on dividends often drops to 15% or lower, and some treaties cut interest withholding to zero. You claim the treaty rate through your W-8BEN. Without that form on file, you pay the full 30% regardless of any treaty you’d otherwise qualify for.
Interest That Escapes the 30% Tax
Not every kind of interest is caught. Interest on most publicly traded bonds and registered debt qualifies as “portfolio interest” and is fully exempt from withholding, provided you own less than 10% of the issuer’s voting stock.10Office of the Law Revision Counsel. 26 USC 871 – Tax on Nonresident Alien Individuals The exemption also covers U.S. Treasury interest. The bond has to be in registered form and you need a W-8BEN on file with the payer.
Interest on U.S. bank deposits — savings, checking, and CDs — is generally excluded from the 30% tax for nonresident aliens, making a U.S. bank account a straightforward, tax-free place to park cash.11Internal Revenue Service. Nonresident Aliens – Exclusions From Income
Capital Gains on Stocks: The 183-Day Rule
Here is the most favorable rule in the U.S. tax code for a foreign investor. If you sell stocks, bonds, or other securities at a profit, you generally owe zero U.S. tax on the gain. The 30% withholding hits dividends, not sale proceeds. This is the default for any nonresident alien who spends fewer than 183 days in the United States during the tax year.10Office of the Law Revision Counsel. 26 USC 871 – Tax on Nonresident Alien Individuals
Cross the 183-day line in a single tax year and your net U.S.-source capital gains become taxable at a flat 30%.10Office of the Law Revision Counsel. 26 USC 871 – Tax on Nonresident Alien Individuals If you split time between countries, counting your U.S. days carefully is worth real money.
Selling U.S. Real Estate Under FIRPTA
Real estate plays by different rules entirely. Under the Foreign Investment in Real Property Tax Act, any gain on the sale of U.S. real property is treated as income effectively connected with a U.S. business — fully taxable at graduated rates no matter how few days you spent in the country.12Internal Revenue Service. 4.61.12 Foreign Investment in Real Property Tax Act
To make sure the IRS actually collects, the law requires the buyer to withhold 15% of the total sale price and send it directly to the government.12Internal Revenue Service. 4.61.12 Foreign Investment in Real Property Tax Act That 15% is a deposit, not the final tax. If your actual gain was smaller than 15% of the price, you file a return to claim the difference back. If it was larger, you’ll owe more.
A few situations reduce or eliminate the withholding. The most common: if the buyer is an individual purchasing the property as a personal residence and the sale price is $300,000 or less, no FIRPTA withholding is required.13Internal Revenue Service. Exceptions From FIRPTA Withholding Above $300,000 but under $1 million with the same residence use, the rate drops to 10%. You can also apply to the IRS for a withholding certificate to reduce the amount held back if standard withholding would exceed your expected tax.
When You Have to File a U.S. Tax Return
If you operate a U.S. business or earn income effectively connected with U.S. trade or business activity, that income is taxed at the same graduated rates that apply to U.S. citizens, and you can deduct business expenses against it. To report it you file Form 1040-NR, the nonresident alien income tax return.14Internal Revenue Service. About Form 1040-NR, U.S. Nonresident Alien Income Tax Return If you received wages subject to U.S. withholding, the return is due April 15 of the following year; without withheld wages, you have until June 15.15Internal Revenue Service. 2025 Instructions for Form 1040-NR You also file a 1040-NR to claim back any FIRPTA amount that was over-withheld on a real estate sale.
The $60,000 Estate Tax Trap
This is where the code is least kind to foreign investors, and where quiet U.S. portfolios turn into large tax bills. A nonresident alien who dies owning U.S.-situated assets faces federal estate tax on anything above just $60,000.16Internal Revenue Service. Some Nonresidents With U.S. Assets Must File Estate Tax Returns For comparison, U.S. citizens and residents get a $15,000,000 exemption in 2026.17Internal Revenue Service. What’s New – Estate and Gift Tax Amounts above $60,000 can be taxed at rates up to 40%.
U.S.-situated assets for this purpose include U.S. real estate, tangible personal property located here, and shares in U.S. corporations — including stock held through a brokerage account. Gift tax rules are narrower: nonresident aliens are generally subject to gift tax only on transfers of real property and tangible personal property located in the United States, not on transfers of intangibles like stock.18Internal Revenue Service. Frequently Asked Questions on Gift Taxes for Nonresidents Not Citizens of the United States
The gap between $60,000 and $15,000,000 is so wide that many foreign investors hold U.S. stock through foreign holding companies or other planning structures specifically to sidestep the estate tax. Once your U.S. portfolio grows past a modest size, this becomes one of the highest-stakes decisions you’ll make.
State Taxes You Might Also Owe
Federal isn’t the whole picture. About 42 states levy an individual income tax, with top marginal rates running from 2.5% to over 13%; eight states impose no individual income tax. Rules on what a state can tax from a nonresident vary widely. Dividends from stocks in a brokerage account generally are not taxed at the state level for someone with no physical presence in the state, but rental income and business income almost always are, in the state where the property or business sits.
National Security Review: When CFIUS Gets Involved
The Committee on Foreign Investment in the United States (CFIUS) can review and potentially block foreign investments that raise national security concerns. Two categories draw the most attention.
The first is real estate near military installations. CFIUS can review purchases or leases of property that could allow a foreign person to surveil activities at a sensitive government facility. A 2024 rule expanded this authority to cover real estate within one to 100 miles of more than 60 additional military installations.19U.S. Department of the Treasury. Treasury Issues Final Rule Expanding CFIUS Coverage of Real Estate Transactions Around More Than 60 Military Installations
The second is investment in businesses handling critical technologies, critical infrastructure, or sensitive personal data of U.S. citizens — collectively “TID U.S. businesses.” If a foreign government has a substantial interest in the acquirer, or the target produces items requiring export-control licenses, a mandatory CFIUS filing is required before closing.20eCFR. Part 800 Regulations Pertaining to Certain Investments in the United States by Foreign Persons Penalties for failure to file include monetary fines and forced divestiture.21U.S. Department of the Treasury. CFIUS Enforcement and Penalty Guidelines
Ordinary portfolio investments — publicly traded stock and bonds, or residential real estate away from military zones — do not trigger CFIUS review. The concern is with acquisitions that give control over, or access to, sensitive operations.
Reporting Requirements Beyond Taxes
BEA Surveys for Direct Investment
If you acquire or establish a U.S. business rather than just buy stock on an exchange, the Bureau of Economic Analysis has its own reporting rules. Form BE-13 is required when a foreign person acquires or establishes a U.S. business enterprise with total cost above $40 million and holds at least 10% of the voting interest, and it’s due within 45 calendar days of closing.22eCFR. Rules and Regulations for the BE-13, Survey of New Foreign Direct Investment in the United States Annual surveys on Form BE-15 apply to foreign-owned U.S. businesses based on tiered asset, revenue, and income thresholds starting at $40 million.23Bureau of Economic Analysis. 2024 Annual Survey of Foreign Direct Investment in the United States Civil penalties range from $2,500 to $32,500 per violation, and willful failure to report can carry criminal fines up to $10,000 and up to a year in prison.24Bureau of Economic Analysis. BE-13 Claim for Exemption Even below the thresholds, the BEA may require a brief exemption claim.
Agricultural Land Under AFIDA
A foreign person who acquires, transfers, or holds an interest in U.S. agricultural land must report to the Secretary of Agriculture within 90 days of the transaction under the Agricultural Foreign Investment Disclosure Act.25Office of the Law Revision Counsel. 7 USC Chapter 66 – Agricultural Foreign Investment Disclosure The report covers legal description, acreage, purchase price, and intended agricultural use, and it applies regardless of parcel size or dollar amount. Several states impose their own restrictions on foreign ownership of farmland on top of the federal reporting duty, so check the rules in the specific state where the land sits.