Withholding tax on commodity options

Discussion in 'Options' started by raven102, Oct 15, 2011.

  1. raven102


    I am in process of diversifying into commodity options and need some tax withholding clarification.

    As I am going to follow commodity options that are written mostly by US based providers such as CME or CBOT, it (probably) makes sense to have US broker for cost purposes (such as IB or Think or Swim).

    That said, it appears that there is tax withholding needed, and the associated form W-8BEN is even asking for tax identification number in US. I do not have one and do not plan to get one. Is this compulsory, or are options exempt? There is no way I am willing to pay 30% on my future profits and get involved with complex double taxation treaties to reduce that amount. For the record, I trade from a tax advantageous place and intend to keep taxes at minimum for options trading as well.

    Wouldn't I be better off to pay a bit more in commissions and have UK or HK based broker that have access to US commodity options?

    Thank you for your insight!

  2. I am a non US citizen/Non Resident Alien and have been trading thro US based brokers for quite some time.
    I am trading stocks ,futures and options.
    If your W8bEN is current ,your us broker (or even HK or timbaktoo based broker to trade us markets will follow us tax rules )
    and will not deduct any thing on P&L or sales proceedings.

    your dividends will be taxed 30% withholding .That's ok I trade short term.Once in a while I paid 30% dividends on stocks.

    But the nasty surprise once was distribution in Triple leveraged bull /bear ETF (TNA/TZA)

    They gave kind of $8 distribution and instantly stock adjusted post dividend price.But I got 30% deducted from the distribution.Instant loss $3 or so on 500 shares!!!

    I no need to file return and I dont want to bother keeping track of 100's trades a day!!(Unlike US citizens/Residents)

    If you have a physical business (real estate like) in USA,then you need to file return.If you have/had a SSN,then you need to put it.You lie,then they freeze a/c -it will be hell.If you never had a SSN ,just your passport or local ID is ok ..

    otherwise what you make (or lose)-you keep it(30% tax on dividend matters only if you are a buy hold type)
    Iam not a tax attorney but I have been in this since1998 as a alien but failing miserably trading wise!! joking!