To all non-resident alien prof daytraders

C

chs245

I recently started to trade professionally (ie Series 7 licensed and in a US LLC) and have determined that my status for US tax purposes is "non resident alien".

I was wondering whether there are some people on ET who are in the same situation and willing to share their experience.

In particular I wonder whether for US tax purposes we are considered to have a business activity in the US and as such are subject to US income taxes.

Also, I read that if you would like to use mark-to-market accounting, you have to notify the IRS by the 15th of April in the year for which you are planning to apply for that status. Can anyone confirm that ? If I missed that deadline, would that mean that I can't benefit from the "Trader in securities" status THIS year :confused:

Many thanks for any inputs !

Oliver
 
I am an Australian citizen and resident, and I trade US stocks. I don't have a series 7 license yet, so I may not fill your definition of a "professional". Since I am trading for my personal account, and not "engaged in US trade or business", I do not pay any US Capital Gains Taxes. I just pay Australian capital gains taxes.

However, since you are in a US LLC this will probably be different for you.

As for mark-to-market, I can't help you there - that part of your question would be best answered by someone who actually files their 1040 with the IRS :)

By the way - what country are you a citizen and resident of? Who is your broker? Are you trading with a professional firm like Bright or Echo?
 
Originally posted by m22au

However, since you are in a US LLC this will probably be different for you.
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That's what I'm afraid of indeed.


By the way - what country are you a citizen and resident of? Who is your broker? Are you trading with a professional firm like Bright or Echo? [/QUOTE]

I'm living in the Netherlands, trading with Bright.

Oliver
 
If you are pro, mark to market doesn't mean anything to you. Your net profit/loss is summed up in one form at the end of the year and is treated as income from the partnership. You don't have to submit trade records or anything.

As for paying US taxes, it's going to depend on what kind of tax treaty exists between the US and Netherlands. Usually it's a case of paying the taxes where ever they are the highest. The tax treaty should prevent you from paying double taxes. You might need an IRS tax payer ID number since you aren't eligible for a social insurance number. This way the US gov can link you to the tax form the firm sends you at the end of the year.

www.irs.gov
 
If you were from france for exemple you should not have to pay in the USA on capital gain. You just have a withholding tax system but only on dividends. As a DT you dont have time to get dividents :)

Because there is a treaty of "non double taxation" between france and usa. I suppose there is something similar for netherland.
Check that point with your accountant or on the net
 
Originally posted by spieler
If you were from france for exemple you should not have to pay in the USA on capital gain. You just have a withholding tax system but only on dividends. As a DT you dont have time to get dividents :)

Because there is a treaty of "non double taxation" between france and usa. I suppose there is something similar for netherland.
Check that point with your accountant or on the net
More...

As far as my understanding goes that applies only to private investors. I have not get any confirmation yet, but I think that as someone who makes a living from trading, the US IRS wants to claim its "fair" share of your gains.
 
The treaty i am speaking about does not tackle the difference between private and pro ( serie 7)
When you open your account at Bright you should have sign the W-8BEN as foreign status.
in the part II you signed the claim of tax treaty benefits.
 
Originally posted by spieler
If you were from france for exemple you should not have to pay in the USA on capital gain. You just have a withholding tax system but only on dividends. As a DT you dont have time to get dividents :)
More...

Do You mean You do not pay any taxes in France on daytrading gains? Is this true for trading futures, too? I will start learning french at once :-)

Markus
 
Originally posted by chs245



That's what I'm afraid of indeed.


By the way - what country are you a citizen and resident of? Who is your broker? Are you trading with a professional firm like Bright or Echo?
More...


I'm living in the Netherlands, trading with Bright.

Oliver [/QUOTE]

I'm in the UK and was considering remote trading with Bright or another, how do you find it? Do they allow you the same leverage as on site traders?
I have already asked my accountant about the tax status. He is looking into it. Whatever it is for me should be the same for you as we are both EU.
Cheers
 
I'm in the UK and was considering remote trading with Bright or another, how do you find it? Do they allow you the same leverage as on site traders?
I have already asked my accountant about the tax status. He is looking into it. Whatever it is for me should be the same for you as we are both EU.
Cheers [/B][/QUOTE]

I don't think Bright makes a distinction in terms of leverage between remotes and onsites. Generally quite happy with them.
 
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