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IMHO, if you make $100k in your TST account and withdraw say $80k, you have to deduct your taxes from the $80k you've taken out of your account.
And as a result, your account balance decreases by $80k, completely independent of what you'll have to give to your local (country-dependent) taxman...
And I think it depends on your negotiations whether or not your buying power will reduce linear according to the amount of $$ you've taken out of your account.
"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
Consult TST and an accountant. But I know in the US you have 3 years to file. So when 2014 is done, I have up till 2017 to file my taxes for that year.
Are you kidding ? That would be kind of science fiction in Germany...or in other words, they would just estimate your income for the last year.
"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
No. In the US you have 3 years to file an income tax or claim income. I have done so from time to time, so I can carry a loss into a different year.
You can also claim a loss on a business for upto 5 years, after that you will have to show some kind of profit or it will be labeled a hobby. Used this a few times as well.
Again always talk to a professional before anything.
In Germany you've got a maximum of one year (after govt approval) to state your last year's income, and you've got only one year as well to carry your losses to the next year.
Overall this is quite a good solution for startups and young / small firms.
"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
In my understanding, since you work as a contractor for TST, definitely #2 is the answer.
But don't get me wrong, I'm NOT a tax advisor, especially not for US taxes and IRS affairs.
"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
I used to be a tax accountant many moons ago, but unfortunately never dealt with trading related taxes.
In terms of paying taxes in advance, in South Africa, corporations and contractors in general need to pay provisional tax every 6 months for the current year (depending on turnover). Doesn't matter when you file your tax return. You therefore need to make an estimate of your last 6 month's profits and pay tax on that which will reduce the final payment you need to make when you file your return in the future.
When you eventually do file your return, and you've underpaid provisional tax by a certain percentage, you will have to pay penalties.
Death and taxes...
I am not qualified (anymore, in any country) to give tax advise, so ask your tax advisor.
Your point makes sense, but fortunately there is -- at least as I understand it -- a mistaken assumption.
Although you have "made" -- in the sense of, created by your trading -- the $100,000 in "your" account, it is not actually your account, as in, your money. It is part of the capital of the firm you are trading for. It is theirs. You own none of it.
Since it's part of their earnings, the company has a tax liability on the profits that are in the account. After all, it's theirs. You have no liability, since it's not your money.
Now, suppose you want to have some of it. Because of the agreement you have with TsT, you can request a withdrawal, and at that time, they will withdraw the amount you specify, then take the 80/20 split, send you the 80% and keep the 20% of the total withdrawal amount.
(So if you want to receive a specific amount, say 30,000, you have to request a total withdrawal that is large enough that you will get 30,000 after the split. For example, for you to get 30,000, you request that they withdraw 37,500. 37,500 x .8 = 30,000 for you, 37,500 x .2 = 7,500 for them.)
At that time, you have received some money, at last, and so you will have to pay tax on it. You will not have to pay tax on it before they withdraw it from the account, because you will not have received anything yet.
It's important to not think of this as "your" account, like your personal retail account that they have been nice enough to fund for you. It's firm capital and the profits on firm capital. You get paid a percentage of that, per your agreement and not as a matter of ownership, and when you do, you have a tax bill. You have no ownership interest in the account itself, just in what is paid to you under the agreement, and only when it is paid, because that's the only time you actually own any of it.
So, that's what Michael said:
I hope I didn't beat on this poor dead horse too hard. If I did, I'm sorry.
But the point that you only have income from this account when you are paid by TsT for trading it, is pretty important.