Hello guys, I'm going to be moving out of the US for a while (a long long business trip). First year will be spent in Canada and another in Asia. Would I still be able to trade from outside of the US, even if I'm no longer considered a US citizen or resident (shaddy business arrangements )? For those of you who trade from France or Canada, how do you open an account with a broker like IB? Any special papers or tax? Thanks - JS
Is really the only form you need to fill in. Your broker will give you this (available as standard online with IB). It also allows you to enter the country you will be residing to take advantage of any double tax treaties the USA has with them. There are many and basically it stops you paying the full 30% withholding tax on dividend income because (presumably) you are paying tax in your country of residence.
i was curious, does IB know where youre trading from and based on that not let you log in? reason i ask is my friend opened an account in europe with IB and he will be paying taxes in that particular country, my question is, if he comes to the united states will they not let him log into the acct, for example if he was here for a year or so? wouldnt IB say something, ex. like this guy is opening a fake act under a fake name from overseas so that he doesnt have to pay taxes in the states? how does IB or the IRS even keep track of the taxes paid in other countries??? any htoughts? thnx
If your friend will live in the US, he will need to pay taxes here. It doesn't matter where he opened an account with IB, or where he logs in from.
indeed you pay tax where you make money first then by treaty where you live (eventually not paying a dime in US. that's true when you trade from Holland for instance). However, once you are resident in US (citizen or not) you have to pay taxes in US. It is not IB's role to track you for that. Their role is to request the proper information and give it back to IRS if requested. It is not such a good idea to try to slip through. Think about it, all the money is in US. If you are caught, you are really screwed. noone likes to pay taxes.. well not too much taxes at least. but it is not smart to try to cheat right under the irs's nose.. on a nicer note : if you pay taxes, it is become you make money trading. don't complain too much, not everyone succeeds at this. tntneo
ok a hypothetical, if my cousin a non citizen living in europe opens an account there, then he comes to the states for lets say 6 months and stays at my residence, hes on vacation, and wants to trade his acct from my computer in the states, where does he pay taxes? is IB going to request new paperwork since the order commands are coming from a computer in the states and not from europe? thnx for you help guys./
IB would not care less where your cousin logs in. Actually you may already select different IB servers regardless of where you are located. When your 'cousin' is on vacation for 6 months or less, his residency is still in Europe. Tax agencies have rules about that actually, after a number of days per year in a location you are 'resident' of that location as far as taxes are concerned. The threshold and details change per country. but usually it is about the same (6 months) since most western countries have tax treaties between them, so mostly compatible. tntneo
I think tntneo pretty much answered your question. It is your responsibility to file for taxes - you're right, it is probably too complex for international auditing by tax authorities, unless it is a suspiciously large amount of money. It is the same here in the UK, although I must admit I do like the idea that some of my money is out of my own country!
JS - not to get too technical, but if you are a US citizen, you retain your citizenship forever (unless you renounce it), independent of where you reside. And all citizens are responsible for US income taxes on all worldwide income, regardless of residence or country of employment (subject to credits for foreign taxes paid). As far as I know, anyone making any money in the US owes US income taxes, whether visitor or resident alien. of course, it's the responsibility of the individual ultimately to make sure the IRS gets the money... *note I'm not a tax professional - these are just what I believe to be the rules*