W-8BEN, U.S. Taxes & My $100/Month ETF Plan (Q&A)
Clear answers for Cambodian investors using Schwab/IBKR
1) Trade Insight: Why did my OPEN sale pay me less?
Q I sold Opendoor (OPEN) and got much less cash than expected. Why?
- Gross proceeds (principal): 33 × $10.37 = $342.05
- Fees: $0 commission + $0.01 industry fee
- Withholding tax: $82.09 (≈24% of the sale!)
- Net cash received: $259.95
Key Insight That big deduction usually happens when your broker doesn’t have a valid W-8BEN on file for you as a non-U.S. investor. With a current W-8BEN, capital gains (stock sales) normally aren’t taxed for non-U.S. residents.
2) W-8BEN: What it is & how to fix the tax issue
Q What is the W-8BEN and how do I file it?
- Purpose: Proves you’re a non-U.S. person. Prevents unnecessary U.S. tax on capital gains.
- Dividends: Cambodia has no U.S. tax treaty → U.S. dividends face 30% withholding.
Steps (usually 5 minutes)
- Log in to Schwab/IBKR → Tax Forms / Tax Residency.
- Fill Part I: name, Cambodia address, (optional) local TIN.
- Part II: no treaty claim (leave blank for Cambodia).
- Sign & submit. Renew every 3 years.
Result Stock/ETF sales won’t be withheld. Dividends still face 30% U.S. withholding.
3) Picking ETFs that fit Cambodia’s tax reality
Q Which ETFs make sense for me?
Growth-first (low dividend → less tax drag)
- VTI – Total U.S. Market
- VOO – S&P 500
- VXUS – Total International (ex-U.S.)
Income-first (dividends taxed 30%)
- SCHD, VYM – solid dividend ETFs, but expect 30% withholding on payouts
Advanced (later with IBKR)
- Ireland-domiciled ETFs (e.g., CSPX, VWRD) often reduce dividend withholding to 15%.
4) My $100/Month Auto-Invest Plan
Q What simple plan should I follow each month?
- Broker: Schwab International or IBKR
- Allocation: 70% VTI + 30% VXUS
- Every month: $70 → VTI, $30 → VXUS (use fractional shares)
- Rebalance: every 6–12 months using new contributions
Why this works: dividends are modest (VTI ≈ 1.5%, VXUS ≈ 2%), so the 30% withholding has a small effect; growth compounds mainly via price appreciation.
5) Projection Charts
6) Action Checklist
- Submit/renew W-8BEN with your broker.
- Set up auto-deposit: $100/month.
- Buy 70% VTI + 30% VXUS monthly.
- Rebalance using new money every 6–12 months.
- Track dividends; expect 30% withholding (no treaty).
7) Quick FAQ
Q Are capital gains taxed for me in the U.S.?
Generally no for non-U.S. investors with a valid W-8BEN on file. (Your local Cambodia tax rules may still apply.)
Q Why was my OPEN sale withheld?
Likely no current W-8BEN on file → broker withheld conservatively. File W-8BEN to prevent this on future sales.
Q Can I reduce the 30% dividend tax?
Not via treaty (none for Cambodia). Long-term option is Ireland-domiciled ETFs (often 15%) via a broker that offers them (e.g., IBKR).