Keeping the cost down: fees and taxes

[Sirka]

I am struggling with fees and taxes and would like to know what you think.

Question 1) Foreign tax on dividends in IRA accounts.
This one I did not pay attention to, until I bought TEVA and discovered that they took 20% from the dividend. That takes a big byte out of the yield, when compared to dividends from NAT or US stocks. We are in 15% tax bracket, so I got used to no tax on Qualified dividends.

Question 2) Fund of funds like VPDFX charge 0.38% for expenses, but they invest in other fund, that also charge fees. So what is the real cost?

So far I decided to stay away from French companies, like SNY, dividends to us may cost 25% tax (not sure - hard to tell from their Form 20-F, 15 or 25%). Any thoughts on that?

 

[HpRyder]

Foreign tax on dividends in IRA accounts.

You lose on this one. There is no way to recover those taxes. I'd sell it in the IRA & buy in a taxable account. In a taxable account you can recover some, but not all the foreign taxes paid, at tax time by filing form 1116 with you paper tax return. This will at least allow you to recover some of the foreign tax as either a deduction or tax credit. But it increases tax filing complexity.

So far I decided to stay away from French companies, like SNY, dividends to us may cost 25% tax (not sure - hard to tell from their Form 20-F, 15 or 25%). Any thoughts on that?

Try Canadian stocks traded on a US exchange. According to US-Canadian tax treaty the 15% dividend tax is not taken out for many, but not all Canadian stocks held in an IRA. It depends on the broker. Again filing a form 1116 for those foreign stocks held in a taxable account will help some.

 

[Sirka]

Canadian stocks

Try Canadian stocks traded on a US exchange.

Thanks, I do that in taxable account. You are right about some brokers, TD Ameritrade does not take out dividend taxes in IRAs for some stocks, like AEM