Foreign tax question

I was advised to post this question here from a helpful BFOF. I am looking to buy the ticker PAC that is a foreign company. It offers a nice dividend. I wanted to place it in my Traditional IRA as compared to my taxable account due to the dividends. However, there may be a foreign tax. If I do place it in my IRA does the foreign tax apply or not since I’m unable to get a credit unlike in a taxable account? I understand I will pay taxes on distributions. Any help would be nice and appreciated. Thank you.

The foreign tax on PAC is a tax would be paid to the Mexican government. The Mexican government doesn’t care what type of American account PAC is held in - they just want to get the tax that is owed on the dividends. Neither you nor your IRA will be able to claim a tax credit on the foreign tax paid.

From a quick search, it appears that Mexico levies a 10% withholding on dividends paid to US accounts, so you should discount that dividend by 10% when determining whether it’s a good investment for your IRA. You should confirm the withholding yourself before making a purchase.



Thank you AJ. Helpful information from you and all.