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Setting up a Foreign Entity for Forex Trading with High Leverage - Need CPA & Business Formation Advice
I've been day trading forex for about 2 years now and I've developed an automated trading bot that's showing some really promising results in my test environment. I want to scale this up to about 40-50 trades daily, but I'm hitting a roadblock with the leverage limitations in the US. From what I've researched, foreign brokers can offer up to 1:500 leverage, but as a US citizen I can't directly access this. I think there might be a way to set up a foreign entity that can legally trade with this leverage on international forex markets. I'm specifically interested in: - Creating a foreign entity with minimal startup/maintenance costs - Finding a jurisdiction with 0% capital gains taxes - Making sure I'm compliant with all US tax obligations - Working with a regulated foreign broker I've seen mentions of Bermuda, Cayman Islands, Isle of Man, and Seychelles as potential options, but I need someone who really knows this area. My local accountant definitely isn't equipped for this kind of specialized international structure. I don't want to relocate personally - just looking to establish the right business structure. Any recommendations for CPAs or tax attorneys who specialize in this kind of international trading setup? Has anyone successfully done something similar?
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What filing status should my widowed sister use after husband died in February?
I'm helping my sister with her taxes using TurboTax and have a question about her filing status. Her husband (my brother-in-law) unexpectedly passed away in February this year. For their 2023 taxes, which we filed in March, they used "married filing jointly." Now I'm confused about what filing status she should use for this year's taxes since she's now widowed. Can she still file as married filing jointly for this year even though he passed away in February? Or does she need to use a different status like single or head of household? She has no dependents and owns their home. I want to make sure I'm giving her the right guidance since this is already such a difficult time for her. Thanks in advance for any help!
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This is slightly off topic but dont forget that your sister is probably eligible for a Social Security lump sum death benefit of $255. Its not much but its something. She should contact Social Security right away as there are time limits. Also if they were married for at least 9 months she might be eligible for monthly survivor benefits depending on her age.
The 9 month marriage requirement isn't always needed. If the death was accidental or occurred in the line of duty as an active member of the armed forces, the 9-month requirement is waived. Also, if they have a child together, that can change the requirements too.
One more thing to consider - if your sister and her husband had any joint accounts, the basis (original cost) of investments might get a "step up" as of the date of death. This can be SUPER important if they owned stocks or property together. Basically, the deceased's portion gets revalued to what it was worth on the day they died, which can save a ton in capital gains taxes later. Might want to look into this if they had any investments.
I owe $67k penalty to the IRS for foreign gift. What should I do?
Guys I'm freaking out right now. Back in 2020, I received about $270K from my uncle who lives in Europe. I had no idea I needed to report foreign gifts over $100k to the IRS. I just used TurboTax like I do every year and went on with life. Fast forward to last month, I was browsing r/personalfinance and saw something about reporting foreign gifts and my heart literally dropped. I immediately contacted a tax attorney who confirmed I screwed up big time. Yesterday I got the letter from the IRS saying I owe $67k in penalties for failing to file the proper forms!!! I don't even have that kind of money right now. The attorney is saying I might qualify for reasonable cause abatement since I truly didn't know, but he's charging me $400/hour and I'm not sure if it's worth it or if I should just try to negotiate a payment plan with the IRS directly. Has anyone dealt with something like this before? I'm losing sleep over this and don't know what my options are.
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Have you looked into the Streamlined Domestic Offshore Procedures? If this was non-willful (meaning you didn't know about the requirement), this program might help reduce the penalties significantly. I made a similar mistake with not reporting my foreign pension from when I worked in Singapore. The standard penalty would have been about $45k, but through the streamlined program I ended up paying just under $10k. The key is documenting that you genuinely didn't understand the requirement. The fact that you took action immediately after discovering the requirement will work in your favor. Make sure your attorney is specifically experienced with the Streamlined program.
Thanks for this suggestion! I just looked into the Streamlined Procedures and it seems like I might qualify. My attorney mentioned something similar but called it by a different name and was talking about a much smaller reduction. Do you know if I need a specialized attorney for this or if it's something I can handle myself? The legal fees are adding up fast.
You don't absolutely need an attorney to apply for the Streamlined program, but I'd recommend at least a consultation with someone who specializes in international tax issues. The program requires a detailed narrative explaining why your failure to report was non-willful, and that narrative is critical to acceptance. If your current attorney isn't giving you clear information about the Streamlined program (it's very well-established), you might want to get a second opinion. Many tax attorneys offer free initial consultations, so you could shop around. The penalties at stake are significant enough that good representation is worth it, but you shouldn't be paying for an attorney who isn't experienced with exactly this type of situation.
whatever u do, don't ignore this!!! i made that mistake when i got hit with a 18k penalty for not reporting my overseas rental income. thought it would go away if i just didn't respond. BIG MISTAKE. they started garnishing my wages and put a lien on my property which destroyed my credit score. took 3 yrs to finally resolve and ended up paying way more in the end. at minimum set up a payment plan asap even while ur contesting the penalty. u can always get refunded later if u win the abatement but it shows good faith effort.
Is there a time limit on how long the IRS can come after you for these foreign reporting issues? I'm worried now because I inherited a small property in Italy from my grandparents 4 years ago and never reported anything...
Can I deduct mileage while driving a commercial vehicle as a subcontractor?
I've been driving a box truck for a delivery company as a subcontractor for about 7 months now. I get paid per delivery, not hourly, and use their truck. I'm responsible for my own gas and insurance though. I'm trying to figure out my taxes for next year and wondering if I can deduct the mileage. I keep detailed logs of all my trips (around 42,000 miles so far this year). My buddy who does the same work says he just takes the standard mileage deduction, but I'm not sure if that applies since I don't own the vehicle. The company gave me a 1099-NEC last year and will again this year. I've been setting aside money for taxes, but these deductions would really help reduce what I owe. Does anyone know if I can deduct mileage in this situation, or can I only deduct the actual expenses like gas? I'm pretty confused about Schedule C deductions for this type of work.
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Just to add another perspective - I've been a delivery subcontractor for 5 years now. You definitely want to track EVERYTHING. Beyond just gas, make sure you're deducting: 1. Any portion of insurance you pay 2. Parking and tolls (like mentioned above) 3. Car washes (if you pay for them) 4. Any required safety equipment or uniforms 5. Your cell phone percentage used for work 6. Meals during long shifts (50% deductible) My accountant catches stuff I would never think about. The actual expense method can actually work out better than mileage sometimes depending on your situation.
Isn't there a risk of getting audited if you claim too many expenses? I'm a new subcontractor and nervous about deducting too much.
There's always a small audit risk with any business deductions, but it's not about claiming "too many" expenses - it's about claiming legitimate business expenses and having proper documentation. Keep good records of everything - receipts, logs, payment statements. The IRS understands that businesses have expenses. As long as they're legitimate and you can back them up if questioned, you shouldn't be worried. It's your right to take all legal deductions you're entitled to! Just don't make things up or inflate numbers, and you'll be fine.
Quick question - does anyone use any specific apps to track their expenses as a subcontractor? I'm doing delivery work too and trying to stay organized for next year's taxes.
I've been using Stride for the past couple years. It's free and lets you track mileage with GPS plus all your other expenses. You can take photos of receipts right in the app. Really helpful at tax time because you can categorize everything properly for Schedule C.
Can someone explain the difference between tax evasion and failure to pay tax charges?
So I've been confused about something I read in the news recently about someone pleading guilty to a misdemeanor charge of failure to make tax payments. What I don't understand is that this person apparently filed their tax returns (though they were late), but still faced criminal charges. I thought you couldn't be criminally charged if you simply couldn't pay your taxes. Everything I've read online says the IRS typically puts a lien on your assets, eventually seizes them, or garnishes your wages - but doesn't pursue criminal charges just for non-payment. I'm asking because I currently owe taxes from a few years back and I'm on an installment agreement with the IRS. I make my payments every month without fail. I never filed my returns late, but at the time I just couldn't pay everything I owed because I lost my job unexpectedly. I'm worried now - could I potentially face criminal charges even though I'm following my installment agreement? What exactly makes non-payment cross the line into criminal territory? Could this have been avoided with a proper installment agreement? Thanks for any clarity!
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To add some clarification to what's been said - willful failure to pay taxes is a misdemeanor under 26 USC § 7203. The key element is "willfulness" which means voluntarily and intentionally violating a known legal duty. If you're making a good faith effort through an installment agreement, you're demonstrating that you're not willfully avoiding payment.
What if you start an installment agreement but then stop making payments? Is that considered willful at that point? Asking because I missed 2 payments during COVID and am worried.
Temporarily missing payments due to financial hardship, especially during extraordinary circumstances like COVID, generally wouldn't rise to the level of criminal willfulness. The IRS recognizes that financial situations change. If you missed payments due to genuine inability to pay, you should contact the IRS to explain your situation and potentially modify your installment agreement. Willfulness typically requires a pattern of deliberate avoidance despite having the ability to pay. The fact that you're concerned and wanting to get back on track shows good faith, which is the opposite of the willful intent required for criminal charges.
Anyone know if the IRS is more aggressive with certain types of income? Like if you're self-employed vs. W-2? I've heard they audit self-employed people way more often.
Self-employed people do get audited more often because there's more opportunity for under-reporting income or claiming inappropriate deductions. W-2 income is automatically reported to the IRS by employers, but self-employment income has fewer automatic verification systems. That said, the audit rate for everyone has dropped significantly in recent years due to IRS budget constraints.
Ava Garcia
I set up a Belize IBC for forex trading back in 2021 and wanted to share some practical advice. The regulatory benefits (higher leverage) worked great, but the tax situation was a NIGHTMARE. First, most "offshore experts" don't understand how GILTI works for trading entities. I ended up owing nearly the same US tax I would have without the structure, PLUS had $12K in annual compliance costs between the foreign registered agent, specialized tax preparation, and legal reviews. Also, be extremely careful about which foreign broker you use. Many won't accept entities from certain jurisdictions due to their own regulatory requirements. I had to switch brokers twice, which was incredibly disruptive to my trading strategy.
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Mei Lin
AuthorThat's exactly what I'm worried about - spending all this money on the setup only to find out the tax benefits are minimal. Did you find any particular jurisdiction or structure that worked better than others? And any broker recommendations that actually accept these kinds of entities?
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Ava Garcia
I eventually switched from Belize to a Seychelles structure which had slightly better terms for satisfying economic substance requirements with algorithmic trading. The key is finding a jurisdiction that clearly classifies algorithmic trading as "active business income" rather than passive investment income. For brokers, I had good experiences with two firms based in St. Vincent and the Grenadines that specifically work with trading companies. They had reasonable documentation requirements and stable platforms. Just be careful - many foreign brokers have great leverage terms but terrible execution quality or withdrawal issues. Always test with small amounts first.
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StarSailor}
Don't forget about banking issues! This is what killed my foreign trading entity setup. Even after properly forming the company and finding a broker, I couldn't find a reliable bank that would: 1) Open an account for a foreign entity with US beneficial ownership 2) Allow smooth transfers to/from forex brokers 3) Not charge excessive fees I went through 3 different banks in 2 years. First one suddenly closed my account after 6 months with no explanation. Second had 5-day holds on all incoming wire transfers. Third worked OK but charged $75 per outgoing wire transfer which ate into profits.
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Miguel Silva
Did you try any of the digital banking solutions specifically for trading companies? I've heard there are some in Lithuania and Estonia that specialize in this.
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