It’s not too difficult and really only needs to be done if you are profitable (which of course we all hope). The forms are easy but some people just don’t like dealing with it and elect for others to help. Helios is of course happy to ask their CPA any questions for their traders but if there is a unique situation the CPA is not qualified to answer, they may recommend the trader as a local tax advisor. As to if others have the same requirement, my understanding is no because you’re treated as a contractor and not a partner, which may have other issues to consider.
Ryan, You are right but then the capital gains situation you mentioned is applicable when an individual trades in his/her own brokerage accounts and is non-US citizen and non-resident. In fact, in such cases, the foreign national just needs to file a W8-BEN form with the broker and then IRS never comes in the picture. (they even do not need ITIN) However, in the case of Helios, when someone gets a Schedule K-1 then I am not sure if the same logic can be applied. This is because Schedule K-1 is used to pass on the partnership income and in this case the partnership (company/fund/helios) is located in the USA. Do you have a sample Schedule K-1 which you can post here? That will give more clarity and I will be in a better situation to investigate it further. Also, if possible, request you to get some clarification with your firms CPA on the broader guideline regarding schedule K-1 from Helios in such sitiations. (Me sitting in a foreign country and contacting tax consultants in the USA on emails is a bit difficult) I am NOT asking for the tax advice as that bottom line lies with every individual what he/she should do specifically to their tax situation. But certainly a very broad guideline for international traders who are not citizens of USA and not physically located in the USA. What do they need to do when they get schedule K-1 from Helios? I know for sure that they need to report to IRS and hence need ITIN. But do they also need to file taxes to IRS in such situations and use tax treaty benefit in their home country? That's why I am asking for the sample Schedule K-1 as well. let's sort out this confusion once for all. Thank you.
The statement I posted is after talking with the Helios CPA. While yes, the K1 is used to pass on partnership income, however, if you’re profitable this is capital gains. If you withdraw funds and then end up losing the account, the withdrawal amounts become ordinary income and not capital gains. Regarding the K1: https://www.irs.gov/pub/irs-pdf/f1065sk1.pdf. Generally your K1 would have the income listed in one of the following fields: Part III.1 or Part III.8 & Part III.9a. For taxes, if you're profitable at the end of the year, generally you'd file 1042-S. If you had withdrawn profits and then ended up at a loss, I believe you'd be filing 1042-S and then 1040NR (or 1040NR-EZ). Good news is, there is plenty of time to take care of things at tax time, and if you need a few months extension, you can request one. These are my understandings after speaking with the Helios CPA, and not tax advice. Everyone situation may be different and I would suggest if anyone has additional questions regarding taxation, contact Helios directly so that any questions can be directed to their CPA. traders@heliostp.com.
You asked how the trailing draw down works and you just answered your own question, it is calculated intraday. https://help.earn2trade.com/en/articles/3292356-what-is-a-trailing-drawdown
What you are saying is complete new set of information to me. I need to look into it more deeper and carefully. Will send email to Helios as well. Thanks anyways.
Mate, take it easy. Do not worry too much about taxes. As a foreign partner in a U.S. LLC trading futures your income is not "effectively connected income", hence there is not withholding tax and all your profits are paid to you gross. You get Form 1065 from Helios and you use the numbers on it to: 1. file 1042-S - just file, you are not liable to any tax in the U.S. 2. file whatever tax return you need to file in your country of residence and pay all the tax on your income from Helios in that country. Keep it simple - focus on trading, not paperwork.