From the IRS site: Topic 853 - Foreign Earned Income Exclusion â General If you are a United States citizen or a resident alien who lives and works abroad, you may qualify to exclude all or part of your foreign salary or wages, or amounts received as compensation for personal services rendered from your income. If you are a United States citizen with a tax home in a foreign country and you meet the bona fide residence test or physical presence test, you may exclude up to $80,000 for the year 2004 and thereafter. Resident aliens of the United States with a tax home in a foreign country may be eligible for the exclusion if they meet the physical presence test, or if they are citizens or nationals of a country with which the United States has an income tax treaty with an applicable nondiscrimination clause, and they meet the bona fide residence test. Specific guidelines for these two tests are covered in Topic 854. The maximum annual exclusion is prorated on a daily basis if there is any part of the year that you do not qualify under either test.
Just try your compounding WITHOUT TAXES and you will understand perhaps better why people try to defer or avoid taxes...
perhaps, but i'll need to be so much better to beat an 18%+ tax spread don't u think? i mean, i'm exaggerating a bit but if we follow your line of reasoning, why bother looking for tighter spreads, leverage etc, why don't we just buy currencies cash from our bank teller at 1%+ commission rates etc... since we'll get rich anyway... do u see the point now??
You can trade with an offshore account, (100% positive you can in Switzerland, but not so positive about anywhere else) and without any major (note that i said major) problems with tax law. However there are rules that have to be followed. (This is not a complete list by any means, and I'm offering absolutely no professional advice here.) You can't have any of your own money in the account. None. The account has to be held by a citizen and/or legal entity of Switzerland. You must complete numerous legal forms (and I mean a Webster's Dictionary) for being an overseas account manager of foreign funds traded on US exchanges. You Must have certification as an account advisor with the SEC. (Not sure exactly what you need, but it can be the nail in the coffin if you screw it up) You then pay taxes on your salary (as your income is that of a foreign company's, there are things you must do in order to properly file with the IRS. Not sure but I think the company has to pay some sort of a tax or tarif for employing a US citizen, if not them then its you.) Definately don't screw this part up, as it is the whole purpose of trading the foreign funds anyway.
I ran a domestic C Corp while I had my business and it is a logistical nightmare in terms of state and federal returns and compliance. I do not know the amount of red tape for offshore heaven foreign corporation s but I would wager that there is some overhead involved. If your account size and pocketbook allows it by all means - go for it, but I suggest to you looking into all the costs involved in running a Co.