How do I treat the income from an ESPP I sold now that I am a non-resident alien?
"That's a tricky question and you should consult a tax professional that specializes on taxation of non-resident aliens and foreign expats. You should also consider the provisions of the tax treaty, if your country has one with the US. I would suggest you not to seek a ""free advice"" on internet forums, as the costs of making a mistake may be hefty. Generally, sales of stocks is not considered trade or business effectively connected to the US if that's your only activity. However, being this ESPP stock may make it connected to providing personal services, which makes it effectively connected. I'm assuming that since you're filing 1040NR, taxes were withheld by the broker, which means the broker considered this effectively connected income."
"What theyre fishing for is whether the money was earned in the U.S.  It's essentially an interest shelter, and/or avoiding double taxation.   They're saying if you keep income you make outside the US in a bank inside the US, the US thanks you for storing your foreign money here and doesn't tax the interest (but the nation where you earned that income might).   There is no question that the AirBNB income is ""connected with a US trade or business"".   So your next question is whether the fraction of interest earned from that income can be broken out, or whether IRS requires you to declare all the interest from that account.   Honestly given the amount of tax at stake, it may not be worth your time researching.   Now since you seem to be a resident nonresident alien, it seems apparent that whatever economic value you are creating to earn your salary, is being performed in the United States. If this is for an American company and wages paid in USD, no question, that's a US trade or business. But what if it's for a Swedish company running on Swedish servers, serving Swedes and paid in Kroner to a Swedish bank which you then transfer to your US bank? Does it matter if your boots are on sovereign US soil?  This is a complex question, and some countries (UK) say ""if your boots are in our nation, it is trade/income in our nation""... Others (CA) do not.  This is probably a separate question to search or ask. To be clear, the fact that your days as a teacher or trainee do not count toward residency, is a separate question from whether your salary as same counts as US income." "If you sell a stock, with no distributions, then your gain is taxable under §1001.  But not all realized gains will be recognized as taxable.  And some gains which are arguably not realized, will be recognized as taxable. The stock is usually a capital asset for investors, who will generate capital gains under §1(h), but dealers, traders, and hedgers will get different treatment.  If you are an investor, and you held the stock for a year or more, then you can get the beneficial capital gain rates (e.g. 20% instead of 39.6%).  If the asset was held short-term, less than a year, then your tax will generally be calculated at the higher ordinary income rates.  There is also the problem of the net investment tax under §1411.  I am eliding many exceptions, qualifications, and permutations of these rules. If you receive a §316 dividend from a stock, then that is §61 income.  Qualified dividends are ordinary income but will generally be taxed at capital gains rates under §1(h)(11).  Distributions in redemption of your stock are usually treated as sales of stock.  Non-dividend distributions (that are not redemptions) will reduce your basis in the stock to zero (no tax due) and past zero will be treated as gain from a sale. If you exchange stock in a tax-free reorganization (i.e. contribute your company stock in exchange for an acquirer's stock), you have what would normally be considered a realized gain on the exchange, but the differential will not be recognized, if done correctly. If you hold your shares and never sell them, but you engage in other dealings (short sales, options, collars, wash sales, etc.) that impact those shares, then you can sometimes be deemed to have recognized gain on shares that were never sold or exchanged. A more fundamental principle of income tax design is that not all realized gains will be recognized.  IRC §1001(c) says that all realized gains are recognized, except as otherwise provided; that ""otherwise"" is substantial and far-ranging." Best consult a CA as you may anyway need his/her service. I am NRI, availed secured loan (Against house property) in India and now I want to get that money transferred to Finland. Loans by NRI taken in India cannot be transferred outside of India. Refer FOREIGN EXCHANGE MANAGEMENT (BORROWING AND LENDING IN RUPEES) REGULATIONS Loans in Rupees to non-residents 1[***].     7. Subject to the directions issued by the Reserve Bank from time to time in this regard, an authorised dealer in India may grant loan to a     non-resident Indian, (B) against the security of immovable property (other than   agricultural or plantation property or farm house), held by him in   accordance with the Foreign Exchange Management (Acquisition and   Transfer of Immovable Property in India) Regulations, 2000 :   ......   Provided that-   (d) the loan amount shall not be remitted outside India; Alternative: Sell the property in India, transfer the proceeds to NRO account. Repatriate the funds outside India as per Liberalized Remittance Scheme. Form 15CA/CB with CA certificate will be required. The main reasons are that investment are deducted from your gross income and earnings are not taxed until withdrawal. This applies to both traditional IRAs and 401Ks. Roth accounts have different rules but valuable benefits. My effective income tax rate is around 35%. This means that for every $1000 I earn in wage I only get to keep $650. Since my 401K contributions are deferred reductions from my income I can invest 35% more money into my 401K than I would be able to invest in a non-tax-advantaged account. Where I can invest $1000 into my 401K I would only be able to invest $650 into a non-advantaged account with the same wages. If I put $650 into an account yielding 10% then my one-year return on my income is $65 The 10% return on my $1000 is $100. Compared to what I would have been able to take home in the first place this makes my ROI $100/$650 = 15.3% Interest earned in non-advantaged accounts incurs taxes every year. Interest earned in advantaged accounts does not incur taxes until withdrawn. Compounding 10% annually for 20 years is significantly more than 6.5% compounded annually for 20 years. Imagine 10% on a 1000 investment with no additional cash flows over 20 year. The result is $6727, or 672%. Imagine your income tax rate does not reduce below 35%, your after-tax return is 4372, or %437 return. Now imagine you pay taxes every year on 10% take, so your take annually is only 6.5%... Now over 20 years you have $3523 (but you've already paid all taxes on this) and your return is %352 You have earned 24% more money because taxes were deferred until withdrawal! EDIT: Some tabular info for the commenters Your take home from the investment is $3752 because you have diligently paid your taxes every year on the earnings. Now, with the tax deferred until withdrawal! You then owe 35% tax on the withdrawal so you keep 7400 * .65 = $4810 $4810 versus $3750 means you have made an additional $1060, or 28%, from the compounding against tax-advantaged earnings. But Matthew! you say... Annual proceeds from your investments are not taxed at your income tax rate. This is true for now but the political winds are pushing this direction. However, even if you use a reduced rate in the first situation (let's say 30% instead of 35%, if you're a California resident) then the effect is $4140 rather than $3750. Less of a gain, but still a gain. In fact your capital-gains rate would have to be as low as 22% to even this difference out (versus a 35% income tax rate).... And remember that this assumes you're in the same bracket at retirement (which more people are not) You may also note that I used $1000 as the principle in both calculations. This was intentional to show the effects of compounding the taxable earnings alone. If you replace the taxable principle with $650 instead of $1000 then the effect is even more pronounced and only balanced out if your capital gains rate is actually zero! "I was told by the lawyers there was no tax consequence because the two   numbers were the same. That is correct. However, a tax professional tells me that since the start-up stock was   ""realized"" there invokes a taxable event now. That is correct. I'm now led to believe I owe cap-gains tax on the entire 4 year vest   this year That is incorrect. You owe capital gains tax on the sale of your startup stock. Which is accidentally the exact same amount you ""paid"" for the new unvested stocks. There's no taxable event with regards to the new stocks because the amount you paid for them was the amount you got for the old stocks. But you did sell the old stocks, and that is a taxable event." You should probably get a professional tax advice, as it is very specific to the Philipines tax laws and the US-Philippine tax treaty. What I know, however, is that if it was the other way around - you paying a foreigner coming to the US to consult you - you would be withholding 30% of their pay for the IRS which they would be claiming for refund on their own later. So if the US does it to others - I'm not surprised to hear that others do it to the US.  Get a professional advice on what and how you should be doing. In any case, foreign taxes paid can be used to offset your US taxes using form 1116 up to some extent. The sale of shares on vesting convolutes matters. In a way similar to how reinvested dividends are taxed but the newly purchased fund shares' basis has to be increased, you need to be sure to have the correct per share cost basis. It's easy to confuse the total RSU purchase with the correct numbers, only what remained.  The vesting stock is a taxable event, ordinary income.  You then own the stock at that cost basis. A sale after that is long or short term and the profit is the to extent it exceeds that basis.  The fact that you got these shares in 2013 means you should have paid the tax then. And this is part two of the process. Of course the partial sale means a bit of math to calculate the basis of what remained. "As you said, in the US LLC is (usually, unless you elect otherwise) not a separate tax entity. As such, the question ""Does a US LLC owned by a non-resident alien have to pay US taxes"" has no meaning. A US LLC, regardless of who owns it, doesn't pay US income taxes. States are different. Some States do tax LLCs (for example, California), so if you intend to operate in such a State - you need to verify that the extra tax the LLC would pay on top of your personal tax is worth it for you. As I mentioned in the comment, you need to check your decision making very carefully. LLC you create in the US may or may not be recognized as a separate legal/tax entity in your home country. So while you neither gain nor lose anything in the US (since the LLC is transparent tax wise), you may get hit by extra taxes at home if they see the LLC as a non-transparent corporate entity. Also, keep in mind that the liability protection by the LLC usually doesn't cover your own misdeeds. So if you sell products of your own work, the LLC may end up being completely worthless and will only add complexity to your business. I suggest you check all these with a reputable attorney. Not one whose business is to set up LLCs, these are going to tell you anything you want to hear as long as you hire them to do their thing. Talk to one who will not benefit from your decision either way and can provide an unbiased advice."