Aside from the inherent risks of dealing offshore, this tread covers them in great detail, are there any legal restrictions or possible penalties for US citizens opening up an account with an offshore broker and taking advantage of highly leveraged hedged accounts?
My apologies is this has already been addressed and if you can direct me to a recent post, i would be appreciative. Your work on this topic is excellent and exhaustive. Thank you all for your contributions.
I know that you are looking for a quick and easy answer to your tax question, here in the Forum. But, be aware that nobody here (that I know of) is qualified to give tax advice or legal advice.
[B]The following is my opinion. I take no responsibilty for its accuracy, or for what you choose to do with it.[/B]
That being said, âŚ
Generally, the answer to your question is: No, as a foreign person who is not a resident and not a citizen of the U.S., your forex profits will not be taxed by the U.S. However, be aware that retail forex brokers vary in the way they handle the reporting of forex profits to customers, and to the IRS.
Your U.S. broker may, or may not, send you a form called [B]IRS Form 1099,[/B] reporting your forex profits for the previous tax year. If your broker does prepare this form for clients, he may, or may not, submit a copy to the IRS. (Apparently, IRS regulations do not require this reporting in the case of forex accounts; however, some brokers file Form 1099, anyway.)
If you have substantial profits in your U.S. forex account, and if those profits are reported to the IRS on Form 1099, you may be contacted by the IRS for an explanation of why you have not filed a U.S. tax return and paid U.S. tax on those profits. You may, then, be in the position of having to prove to the IRS that you are not a U.S. resident or citizen. Obviously, you want to avoid this nuisance.
[B]So, have a talk with the U.S. broker you have chosen.[/B] If you have not yet decided which U.S. broker to trade with, pick one that you think you might like, [B]and ask that broker all your forex taxation questions.[/B]
A better source for U.S. tax information would be a U.S. tax accountant, or tax lawyer. But, it will probably cost you a fee, just to talk to those professionals.
There is a lot of useless information about taxes on the internet. However, this particular webpage was written by a tax accountant, and you may find it to be useful â Forex Education - Taxes - Interbank FX
As for your tax liability in Malaysia, thatâs between you and the Malaysian tax authorities.
Yes, this question comes up from time to time. However, no need to apologize.
As far as we know, there are no U.S. laws/regulations/rules/restrictions prohibiting such an account.
The CFTC would surely chase down every U.S. resident who had the audacity to open an offshore account â [B]if[/B] they had the authority to do so. Thank God, they do not have that authority.
Evidently, there is nothing in the U.S. Tax Code prohibiting offshore forex accounts for U.S. residents or citizens, no matter how offensive the CFTC might think those accounts are. However, the Tax Code is tens of thousands of pages of nanny-state crap; so, who knows whatâs buried in there?
Be aware that all your foreign financial accounts, including retail forex accounts, must be reported to the IRS on a form called FBAR (Foreign Bank Account Report), if the aggregate balance of all your various foreign accounts combined equals or exceeds $10,000. This reporting is required based on equity, not on gains or profits earned in these accounts. If you deposited $10,000 into an offshore forex account, and never earned a penny of profit, you would still have to report all the details of your account to the IRS, even though there would be no tax liability. If you had profits, they would have to be reported on your tax return, and would be added to your taxable income for purposes of figuring taxes owed. Remember, that the U.S. government taxes your worldwide income, regardless of where itâs earned.
Sorry. I didnât mean to go on a rant.
Back to your original question â Go for it, open an offshore account with any broker who offers what youâre looking for. And donât worry about government interference [B]on your end.[/B] However, expect the CFTC to look for ways to attack any offshore broker who is willing to deal with you.
Clint, thank you for your commentary. Very insightful and helpful. Looking forward to following this thread.
Thank you clint for the explanation. Much appreciated.
The CME Eurodollar futures contract is the highest combined volume than any other futures contract (perhaps the entire rest of CME futures combined). The contract size is $1,000,000 and the overnight margin is between $400-800. This is usually cut in half or more for day trading. So thats 1:1200 to 1:4000 leverage depending on whether or not you are day trading. My point is that futures already has high leverage. But forex is good because the contract size is customizable (micro/nano lots) combine that with high leverage and a smaller trader is in a much better position to trade without needing a large starting balanceâŚ
As much as you may be initated at big brother protecting you, playing the victim role will not solve your problem. Either find a way to qualify for the âAccredited Investorâ, or establish residency in another province, or the best option: establish residency outside USA/canada (preferably outside North America, although Mexico will do nicely). This process is simple to do actually; and then you can open accounts at any brokerage you want. The whole offshore IBC thing is a bit risky as many of those resellers are just taking advantage of your ignorance (read: rip-off). If you are serious about forex trading (or any financial trading), consider getting a foreign id (drivers license) and utility bill, and open account with your favorite broker. Maybe even setup a bank account while you are at it.
Your residence location is the problem. And you canât solve the problem at the level of the problem. At some point, youâll have to vote with your feet. Not necessarily permanently, but you get the idea.
Clint can you contact some of the others so we can get a nice list. I havent been able to reach saxo bank. They would be a nice option.
I have no idea what youâre asking for.
You joined this forum today. Okay, welcome to the forum.
Then you blitzed the forum with 14 posts in 23 minutes. WTF? â Edit: Make that: 24 posts in 33 minutes.
Maybe you need to stop talking, and do more reading.
Take a look fxGlory.com, they accepted US clients. Iâve opened live account, just waiting for them add PayPal. Leverage 1:3000 is good opportunity. Their office located in Dubai.
Now iâm interesting brokers in Dubai, they donât care CFTC rules :35:
Hi, I had the same thing happen to me⌠Does it mean you can not forex trade at all in alberta. Or you can trade with a broker out of Canada⌠Have you found out any answers. if you do I would love if you could respond as soon as possible
Thanks
Apparently your question is directed to Aaron (akeakamai), regarding his regulatory problems in Alberta.
He has been posting his progress on Michael Huddlestonâs new thread â
ProfiForex.com: Leverage 500:1, unregulation, accepted US clients, easy register, $5 bonus for new account.
Iâve been with them long time, withdraw profits too many times by PayPal with no problem, request withdraw on business day you got money within 24hrs., request withdraw on weekend you have to wait their official time, of course nobody works on weekend. I have no complain with this broker.
This is answer from fxGlory.com:
[B][I]Hello Peter
Welcome to our brokerage
As you know Us residents have some limitations for opening a trading account in brokerages which are outside the USA and also they have not got Regulation of USA.
if You like to open an account in Fxglory, you should read user agreement and sing it first,(User agreement attached) after that , you can open account in this page:
Glory Way LLC | Best brokerage on the World
(you have 1 month for sending the original signed user agreement to the following address in Dubai:
Office Address :
Office No 101, Algrair Building, Omar Bin Al Khattab Road Deira, Dubai, United Arab Emirates, GLORY WAY GENRAL TRADING LLC , P.O.Box 172569
Regards,
Support Department
Glory Way General Trading L.L.C
Office Address : Office No 101, Algrair Building, Omar Bin Al Khattab Road Deira, Dubai,
United Arab Emirates, GLORY WAY GENRAL TRADING LLC , P.O.Box 172569
Support Phone : +97 150 8734792
Fax Number : +97 142 691715
Website : Glory Way LLC | Best brokerage on the World[/I][/B]
and attached user_agreement PDF file.
RE: FXGlory
I couldnât find them listed on the UAE Securities website.
scaDOTgovDOTae/english/Pages/defaultDOTaspx
Something is not right here? Perhaps, someone has some clarification on this company?
I've been delaying doing anything about these two recommendations, pending more information.
Thanks for looking into this broker.
I agree that more vetting is needed. I tried to dig up some information, and came up with a number of contradictions.
The reply to etrade360 from FXGlory (which he posted above) seems to say that there are regulatory issues for U.S. residents, but that he (etrade360) can go ahead and open an account.
However, Earn Forex, a generally reliable forex site, says that FXGlory does not accept U.S. residents.
Edit (6/6/12) --- Earn Forex has updated their listing, which now shows that FXGlory does accept U.S. clients.
Then, there's this Babypips page saying that FXGlory was banned from the Forum in April. Don't jump to conclusions about this --- there's no way to know, without more info, who the banned party was. It could have been an I.B. of FXGlory (Dubai), or it could have been someone who was not affiliated in any way with FXGlory (Dubai).
I will forward this info to the Babypips Administrator, and ask whether they can tell us who the banned Forum member was --- or, at least, what country the banned Forum member was from.
Edit (5/30/12) --- The Administrator refused to give me any info. "Privacy issues" was the reason given.
There is a company in the U.K. called FXGlory Ltd. But, I haven't been able to find out anything about them. They might not even be involved in the forex market --- FX can mean lots of different things.
This is as far as I got trying to find out about FXGlory Ltd:
FXGLORY LTD --- and --- https://www.jordanwatch.co.uk/reports/order/07782399/fxgloryltd.html
If anyone else has information on FXGlory (Dubai) and/or ProfiForex (Seychelles), please share.
I am planning to go live with Profiforex Dealing Center next month. If any US residents or others have relevant information on them now would be a good time to let me know.
You are a game man
I am a U.S. resident, and I just signed up for Traders Way. In sum, so far, so good. Some comments:
Ultimately, I sided with Traders Way because of the legal documents. The trader agreement was extensive, and it was written very well. I didnât catch any grammar or spelling errors, and it covered all of the bases. Also, when I funded my account, I had to agree not to do chargebacks on the credit card because itâs fraudulent, blah blah. In other words, if this company were interested in taking my money and running for it, theyâd probably not put too much effort in writing the legal documents. I think it shows willingness to run a good business. Of course, I canât judge this yet 100%, but I will post again if anything happens to the contrary.
The written English from their customer service staff was OK. No capitalization, odd sentences, etc. I pay attention to this stuff because I think it reflects on the professionalism of the company itself. I only used live chat, so I have no idea how well spoken they are.
At any rate, thus far, itâs a good off-shore broker, and a good alternative to the brokers in the U.S. that wonât let me do what I want with my own money.
Thanks for this feed-back.
I have added a reference to your post in the listing for Traders Way, in our List of Offshore Brokers (post #2 on page 1).
Welcome to this thread, by the way.
âforexforsureâ, eh? â interesting accent.