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Old 08-30-2015, 07:19 PM   #1
akamalaysianboy
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Opening Forex account using offshore account

Hi, I was wondering if anyone is familiar opening a Forex account using offshore account but residing in the US. In order to do this, one would have to declare as not a US residence. Not planning to transfer any gain, if any, back to the US as an income. The money will remain offshore. Just wondering if this would raise any flag to the IRS.
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Old 08-31-2015, 01:52 PM   #2
Wraisil
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U.S. citizens, resident aliens and certain nonresident aliens are required to report worldwide income from all sources including foreign accounts and pay taxes on income from those accounts at their individual rates.


There are many legitimate reasons for holding offshore accounts, including convenience, investing and to facilitate international transactions. By law, U.S. taxpayers are not permitted to use offshore accounts, such as foreign bank and securities accounts as well as trusts, to avoid paying tax.

In most cases, affected taxpayers need to fill out and attach Schedule B to their tax returns. Part III of Schedule B asks about the existence of foreign accounts and usually requires U.S. citizens to report the country in which each account is located. Certain taxpayers may also have to fill out and attach to their return Form 8938, Statement of Foreign Financial Assets, if the aggregate value of those assets exceeds certain thresholds that vary depending on filing status and whether the taxpayer lives abroad. Additional filing requirements apply to those with foreign trusts.

Separately, taxpayers with foreign accounts whose aggregate value exceeds $10,000 any time during the year must file a Form 114, Report of Foreign Bank and Financial Accounts (FBAR) electronically through FinCEN's BSA E-Filing System. The FBAR is not filed with a federal tax return and must be filed by June 30 each year.

The reporting requirements of the Form 8938 and FBAR differ. More details on who most file and the specific type of assets that must be reported for both forms can be found on the IRS.gov.

Failure to report the existence of offshore accounts or pay taxes on these accounts can lead to civil and criminal penalties.

For the Form 8938, the penalty may be up to $10,000 for failure to disclose and an additional $10,000 for each 30 days of non-filing after IRS notice of a failure to disclose, for a potential maximum penalty of $60,000; criminal penalties may also apply.

For the FBAR, the penalty may be up to $10,000, if the failure to file is non-willful; if willful, however, the penalty is up to the greater of $100,000 or 50 percent of account balances; criminal penalties may also apply.

Taxpayers with undisclosed accounts should consider options available under the expanded streamlined filing process or the Offshore Voluntary Disclosure program.
Yes, it can be done legally. No, you generally can't avoid telling the IRS about it without breaking the law unless you fall into an exempt category (i.e. a diplomat, employee of a foreign government's diplomat, etc).

Last edited by Wraisil; 08-31-2015 at 01:52 PM.
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Old 08-31-2015, 02:05 PM   #3
akamalaysianboy
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Wraisil, thank you for the information. Any offshore bank account that has a gain regardless whether I'm transferring the money back to the US would need to be reported.

A follow up question I have, I open an offshore bank account so it's easier for me to pay my loan property. There won't be any income or gain on that offshore account since I'll be transferring my income from here to that offshore bank account to pay bill/loan only. Am I still required to report this? Thanks again for answering my question.
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Old 09-01-2015, 12:12 PM   #4
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Failure to report the existence of offshore accounts or pay taxes on these accounts can lead to civil and criminal penalties.

You must disclose the account in most cases regardless if you're making money in it or not.
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