You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Trading FROM offshore
- Thread starter JS11374
- Start date
as long as the money remain in the company, only the company is taxed based on its tax residency.
your problem is when you want to get some money, since you are US resident/citizen, you have to declare the money.
but as long as the money is in the company, only the company is taxed, it is a separated entity from its owners (unless LLC, which is pass through).
tntneo
your problem is when you want to get some money, since you are US resident/citizen, you have to declare the money.
but as long as the money is in the company, only the company is taxed, it is a separated entity from its owners (unless LLC, which is pass through).
tntneo
Originally posted by Simba
If the trading account (e.g. IB) is set up as a foreign account (assuming this is legitimate), the account does not have any tax liability in the U.S.
That's only true if the country of residence has a tax treaty with the US that provides for full exemption. Most treaties declare full exemption only for capital gains and impose partial exemptions on dividend and interest income. If there's no tax treaty all income derived from capital gains, interest and dividends of US based companies is subject to withholding at the 30% rate. In that case you will need to file form 1040NR to receive a (partial) refund. Some brokers like IB won't let you open an account if they would have to do full backup withholding on it.
Interestingly IB does not do any withholding on interest and dividend income even if the applicable tax treaty only provides for partial exemption from withholding on those sources. I guess this also explains why they don't send any 1042-S forms to their non-resident alien account holders which are needed to file for a refund with local tax authorities. Oddly enough for the last two years IB even sent me 1099 forms for two of my accounts even though they're set up under non-resident alien status. I suspect they decide based on whether they have an SSN on file. So far I haven't receive any 1099 forms this year though.
It does not matter from which physical location the trading takes place. Even if a person trades from within the U.S. (e.g. on vacation), this does not change the tax status of the account.
True as long as the "183 days rule" is observed
Dave
Originally posted by todd960
So if I open a trading account in the U.S. through an IBC, and I am also a U.S. citizen, will anyone be able to trace me back to the account somehow?
TIA
Probably not, if setup right. definitely not legal if you care about that.
QUOTE
Will the brokerage want to know who really is behind the IBC?
If you figure out the above, I think you can get by this.
Originally posted by tntneo
as long as the money remain in the company, only the company is taxed based on its tax residency.
your problem is when you want to get some money, since you are US resident/citizen, you have to declare the money.
but as long as the money is in the company, only the company is taxed, it is a separated entity from its owners (unless LLC, which is pass through).
tntneo
Not exactly legal, you will fall into the "Controlled Foreign Corporation" rules, if I quoted that right, whether or not you distribute, "legally" the income passes through as phantom income. Number of ways around it, get a very big and reputable accounting firm and give them around $25,000 and they will work it out.
Originally posted by bro59
Since income derived from "personal service" work performed by US citizens while residing overseas can, after the first year, qualify for the ex-pat exemption I'm wondering (out loud) if anyone here has received such tax treatment as a trader-member of one of the US based professional firms. Likewise I suppose someone who has qualified as a "trader" while trading a retail account with a US brokerage might also shelter part of this "income" if residing outside the US. Anybody with real experience in such matters care to drop us a clue as to the possibility of such arrangements passing muster with our friendly tax man? With all possible disclaimers as to liablility in place, of course.
Yes it will work; however you have to be "employed" by an entity, your entity, to turn it into qualifying income.