My fiance is from Canada and in the future residing in Canada would be an option worth exploring, if research proves it seems Canada does not follow in its neighbors footsteps and cause International brokers to close doors on its residents.
Hi Clint and all,
It’s been awhile since I’ve been active here. I need the most updated information. My question is:
It is okay to have an offshore broker as long as you file the FBAR to IRS. To be tax compliant in US, report profit as an income.
Thanks,
Pipsmyway
There are many things that I think Canada could possibly do better. I am glad that this is not one of them. Hopefully, at least.
In addition to that, not sure if you saw or not, but certain brokers will not take on U.S. citizens as traders at all, due to excessive CFTC over-regulation, and the CFTC’s apparent desire to force their way into other countries’ businesses to ensure compliance with U.S. regulations.
I will outright say I would move to Canada now if I could afford it. I am SO disgusted with what has been happening here in the United States during the past 6 & a half years that it makes me want to move to another country. And I’m not only referencing the situation with U.S. government causing problems with us traders here in the United States, but I am referring to [B]everything.[/B] Everything is now backwards here in the United States. Due to our government making up their own rules to fit THEIR agenda, what was once clearly wrong is now viewed as “right” and what was once clearing right is now viewed as “wrong” … all due to the corrupt politicians and Supreme Court justices as well. Lies and scandals have always been a part of the government to some degree, but never to the degree that it has been during the last 6 - 7 years. Add to that the fact that the national security on several fronts is getting weaker and weaker. And on top of all that, we (traders from the United States) now are being attacked by the government in an effort to control how we trade, as well as they are also trying to make it more difficult for us to use overseas brokers.
I’m sorry to sound so negative, but this is reality today here in America. I’m not saying this country has ever been perfect, but it is definitely not the same country it used to be.
The short answer is [I]Yes.[/I] Nothing has changed in the law in the last couple of years.
•
The long answer, for anyone not up to speed on this topic, can be outlined this way:
• There are no laws in the U.S. prohibiting U.S. citizens, or U.S. residents, from having financial accounts (or other forms of financial holdings) in foreign countries.
• In the case of a retail forex trading account held by a U.S. resident in an offshore brokerage, the CFTC has [I]no authority[/I] over the trader holding such an account.
But, depending on circumstances, the CFTC may have [I]some authority[/I] over the offshore broker concerned. It all depends on several factors, primarily (1) does that broker have any “presence” in the U.S. subject to CFTC regulation, and (2) has that broker’s home government made a deal with the CFTC (called a Memorandum of Understanding), committing that government to comply with CFTC regulations regarding U.S. residents.
• Traders, like yourself, looking to trade offshore, need not become experts in CFTC regulation, or in the laws of the offshore jurisdiction where you are looking to trade. Instead, pick a reputable broker in that jurisdiction, and let the broker manage the legalities of accepting U.S. residents as clients.
[I]The purpose of this thread is to provide you with a list of such brokers.[/I]
• The U.S. [I]tax laws[/I] are another matter altogether, administered by a different agency of the U.S. government — the Internal Revenue Service (IRS) — or, as some of us refer to them, the Income Redistribution System.
The IRS asserts the right to tax U.S. residents on their worldwide income, which includes income (profit) earned in offshore forex accounts. Failure to report such income, and pay any applicable tax on it, is just as serious an offense as failing to report income earned in the U.S. If you do it, and the IRS catches you, they will not treat you gently.
In addition to the requirement for including offshore forex profits in your tax return, the IRS imposes a reporting requirement on all offshore financial accounts (forex, or other) holding balances above certain thresholds, [I]whether they have earned profits, or not.[/I] This is the FBAR reporting requirement, which you referred to in your post.
Basically, the FBAR requirement applies to a U.S. person holding foreign financial accounts IF the total value of all accounts combined equals or exceeds $10,000 at any time during the tax year in question. If you, as a forex trader, have an offshore forex account and an offshore bank account, then the aggregate (total) value of those two accounts is the amount the FBAR is concerned with.
For U.S. persons holding foreign accounts with an aggregate worth of $50,000 or more, there is a different reporting requirement.
If the FBAR applies to you, you will be required to identify each offshore account you hold, and report the balance held in that account. This report is made to the IRS, but it is separate from your annual (or quarterly) tax return. If you are required to file the FBAR, and you fail to do so, and the IRS catches you, the penalties will likely be even more severe than the penalties for failing to report your foreign income.
• Here are some strategies to consider:
(1) Keep the aggregate sum of all your offshore financial holdings (all accounts combined) under the $10,000 threshold, so that you can stop worrying about the FBAR reporting requirement. If you are generating profits offshore, this will require repatriating excess profits back to the U.S., so that they don’t put you over the threshold.
If you are specifically trying to move all (or most) of your assets out of the U.S., into foreign “tax havens” or other foreign jurisdictions, then repatriating profits would be counter to your objective, and this strategy would not apply to you. Instead, you will need to acquaint yourself with the FBAR reporting requirements, and make sure that you are in compliance.
(2) Understand that, if you have offshore forex profits which must be reported on your tax return, you will be revealing the existence of your offshore broker to the IRS — whether the FBAR reporting requirement applies to you, or not. And the IRS is notorious for assuming that anyone holding assets offshore, and especially anyone earning profits offshore, is probably a tax-evader, and should be pursued aggressively. Therefore, you need to keep all your ducks in a row, so to speak, so that you can defend your tax return against an IRS audit. If (or when) the IRS becomes aware of your offshore forex account, they will assume that you are guilty of something, unless (and until) you can prove that you are innocent.
(3) If you have [I]large deposits[/I] offshore, and/or if you generate [I]large forex profits[/I] (either offshore, or here in the U.S.), you definitely should employ the services of tax accountants who specialize in forex taxation. If you have read this thread, you have no doubt come across the name of one such firm which has gotten good reviews from several members of this forum. Do a forum search for that name, and for other forum postings on the subject of taxes and tax reporting requirements.
[I]But, do not rely on this forum,[/I] or any internet forum, for accurate tax information. Search out a tax professional with experience preparing the tax returns of traders in circumstances similar to yours. Be aware that many so-called tax preparers don’t have a clue what the forex market is about. That’s why you may need a specialist. Such a person, or firm, will not be inexpensive. But, their fees will be trivial, compared to the pain and suffering that the IRS can inflict on you.
Finally, don’t assume that you can depend on the IRS for reliable tax information, or for help figuring out how to handle your forex reporting requirements. The IRS, like every other bloated government bureaucracy, is staffed with all sorts of entry-level people, some of whom are dumber than gravel. And in every case in which a taxpayer relies on [I]bad information from the IRS,[/I] the IRS takes the position that it’s the taxpayer’s fault for not seeking better information.
•
If all of the above is depressing you, cheer up. Many of us trade forex offshore, without getting into serious trouble with the IRS. But, if you choose to go this route, you need to be aware of the [I]potential[/I] for serious trouble, and take the necessary measures in advance to protect yourself.
.
Two things I wish to cover on this reply from Clint.
While the above is most likely technically accurate, I am sure it is not for lack of trying to “Nanny State” the entire citizenship of the U.S.
I am partial to the Infernal Revenue Service myself. Also, the progressives are trying to make the thugs, err, sorry, the IRS responsible for more and more of the power over our lives here, including now having access to medical information because of the “wonderful” and “Constitutional” Affordable Health Care Act (affectionately called Obamacare).
Hi Clint,
I have seen this thread a long time ago but never had the time to read it. So now I started the work.
The first thing I would like to ask if it makes sense to read the thread from the beginning or do you think in the first hundreds of posts many are out of date?
Also I would like to know - based on your knowledge - what percentage of all Brokers are listed in your posts number 3 and 4? I just wonder because I tried to look if you have any comment on PipIndex Capital Markets Ltd and it is not included in the list.
Thanks and I am looking forward to learn a lot from another one of your great works,
FE
One more comment, Clint.
I have to know in the beginning if the main topic is to find Brokers which do Business with US customers OR the main topic is to find Brokers which do Business with US customers with a higher than 50:1 leverage. This is important as there are Brokers which do Business with US customers but with bad leverage. So I guess you eliminate these Brokers from your list as you want to have higher leverage possibilities.
This question might be too easy for the thread but I have to know in the beginning where I stand.
Thanks,
FE
Hello FE,
I wouldn’t suggest reading 3,000 posts. Clearly, many of them are now obsolete.
Read the first 4 posts — that’s where all of our work over the past 5 years is summarized.
Read post #5, if you want to understand the unrest and discontent which triggered all of this.
Read as many of the most recent posts as you feel like reading.
You’re referring to the Alphabetical List. I can only guess what percentage of all brokers in the world appear in that List — 20% maybe?
I don’t even know how many brokers there are in that Alphabetical List. As names come to my attention, I add them to that list. I don’t count them.
We have never filtered our List for “low leverage”.
We have 2 filters —
(1) an objective filter - will a particular offshore broker do business with U.S. residents?
(2) a subjective filter - are we comfortable with that broker’s reputation for integrity?
High allowable leverage is important to many of our readers, so we investigate and note the leverage offered by each broker listed in Group 1. But, we don’t use leverage as a filter.
•
I’m curious about something, FE.
You and I had a lively conversation via Private Message last December. At that time, you indicated that you reside in Europe, and trade with European brokers. You asked me for some broker recommendations, and specifically you asked about brokers who accommodate trading in both forex and futures. In one of my replies to you, I gave you a list of 13 brokers which seemed to me to satisfy your requirements. Three of them were in the U.S., and the rest were in Europe, Canada, or Australia.
Here is what I’m curious about. Why would you be concerned with brokers outside the U.S. who choose to deal with U.S. residents, when you yourself are not a U.S. resident?
As U.S. residents, [I]we have very limited choices (14, to be exact)[/I] of offshore brokers who will deal with us.
But you, as a resident of Europe, already have hundreds to choose from.
Hi Clint,
as usually, thanks for your detailed answer.
I already read the beginning of the thread and then read the recent updates as you suggested.
Thanks about the Alphabetical list. As I see you update them very often, that is great from you. Doing that still after almost 5 years is just great commitment.
Also thanks for the heads up on filters.
Regarding the last part of your post, your memory is geat about Brokers and my PM. I also answer you now in PM rather than here.
I will keep reading your thread and might add some interesting information.
All the best,
FE
Tallinex offers leverage up to 1:1000 for US residents.
One important thing to remember is that FATCA has made most of the world financial institutions now either snitch directly for the USA IRS or those institutions will likely just refuse to do business with USA residents altogether. [B]Essentially FATCA requires [U]the bank or qualifying institution[/U][/B] to collect certain information regarding USA persons who open or who have a significant interest in certain accounts or financial products. You may think that it only applies to US citizens. But sometimes the bank’s interpretations of the FATCA rules will have them require ALL applicants (any nationality) to fill out and/or sign some statement, W8/W9, etc. See an example in this thread: Thailand is Fatca pending… - Jobs, economy, banking, business, investments - Thailand Forum .
The Euro is also tightening up how its currency or equivalents are used outside the EUROZONE. An example is the recent WebMoney changes: Requirements for WME Purse owners (Natural Persons) - WebMoney Wiki
Basically, rather than rely on individuals to report, it is easier to go after the financial institutions and get them to become de-facto (or de-fatca) snitches.
First off… To Clint— thank you for doing such a great job on this thread… 
Ok – so after reading this thread for the last 3 days— it has come down to tradersway vs fxchoice… Anyone with experience on both recently have a opinion one way or the other?
Well, it will depend which services or platforms you need. TradersWay offers both MetaTrader and cTrader. For those who don’t know, cTrader is really an up and coming platform for “21st century” coding of Robots. Of course, MetaTrader will be with us forever 
If you are a manual trader, you would find the cTrader platform flat out Amazing !! I am seriously considering writing some Robot support code in their C# cAlgo language for use at TradersWay.
Unfortunately the cTrader platform is unavailable in the U.S. MB Trading briefly offered it, and then they dropped it.
hyperscalper
I have a huge investment in Dukascopy JForex API code. Hundreds of thousands of
lines. Since FXDD Retail left the U.S. and FXCM refused to pick up Dukascopy’s
White Label program U.S. persons like myself have been locked out of the
world’s premium Forex brokerage (IMHO) . However…
I am considering FinLab which is a Dukascopy White Label (WL) partner and located in Armenia.
Any such WL partner offers a portal into the full functionality of the Dukascopy platform
and infrastructure, by the way; so I am extremely interested if anyone has any
info on this or any other who would deal with us U.S. persons.
Anyone have any experience, by chance, with this brokerage ? I’ll post back once
I’ve spoken with them, but maybe we can add them to our list if they will deal
(discreetly/discretely) with U.S. persons :))
Laboratory of Financial Technologies
Here is a public link to Dukascopy’s program, listing “some” of their WL partners.
http://www.dukascopy.com/swiss/english/ia/WL/wl-prtners/
hyperscalper
Hi,
As U.S. persons, confronted by seemingly insurmountable
CFTC and related agency restrictions, it seems to me that
"we" should begin an organized Lobbying Effort with the
aim of obtaining legislation or enforcement rules changes,
toward selective Exemption from restrictions which
would enable foreign brokerages to accept us as clients
without regulatory liability.
Off the top of my head, a trader would be permitted to submit
an Application for Exemption Certification to the IRS or CFTC stipulating
Compliance with all U.S. Tax and Money Laundering provisions.
The trader would then be granted an Exemption which would
enable the foreign brokerage to accept the client, with no
liability.
Maybe someone else has already thought of this, but I’d like
to hear U.S. persons’ thoughts on this idea, and how we might
start things moving which would enable a relaxation of restrictions
on usage of foreign Forex Brokerages. We need to do something
to turn the tide just a bit in our favor
hyperscalper
As a followup on my own post, I’ve decided to use SpotWare’s “Connect” API which is a RESTful type of API that is programming language neutral. By doing this, we will be able to run our Robots on non-Windows systems such as Linux, and will not have to be tied to the C# language. In my case, my choice will be Java.
Here’s a link to SpotWare’s site with their open API.
https://connect.spotware.com/
hyperscalper
I am in the U.S., and I agree with your thought process. However, I see a large problem with getting this to happen any time soon. And you can thank the Nanny-State progressives who feel they know better than us what is best for us. I believe that this particular problem is only a symptom of a much larger problem. I have a sneaking suspicion that their mindset had a large part to do with the CFTC enacting all these laws, and their (the progressives) intent to worm their way into as much of our lives as they can get away with.
I know that tallinex starts a trader out with 200 level margin. My question is how long does it take before I can request 500 to 1 leverage. I am trying to decide between tallinex and tradersway. I have heard good things about both brokerages. My style of trading is daytrading [currently day trading eurfx and emini sp on the cme globex exchange [where I get reduced day trading margins]. So I am wanting to trade forex eur/usd using the same day trading methods. I am always flat and the end of the day and NEVER carry a position over night. So based on this how long would it be before I could get the 500 - 1 leverage