Do I have to pay taxes in the US if my online store sells to US customers even though I don't live in the US?
You're not physically present in the US, you're not a US citizen, you're not a green card holder, and you don't have a business that is registered in the US - US laws do not apply to you. You're not in any way under the US jurisdiction.  Effectively connected income is income effectively connected to your business in the US. You're not in the US, so there's nothing to effectively connect your income to. Quote from the link: You usually are considered to be engaged in a U.S. trade or business   when you perform personal services in the United States. You ask: If I form an LLC or C corp am I liable for this withholding tax? If you form a legal entity in a US jurisdiction - then that entity becomes subjected to that jurisdiction. If you're physically present in the US - then ECI may become an issue, and you also may become a resident based on the length of your stay.
It is not right to force people to buy any product or service. Period. Do you see how wrong this is? I'd wager that you and I both agree that getting health insurance is a responsible thing to do. Ok, good. But I do not agree that anyone should be forced to buy anything. This is tyranny.  Regardless of what is responsible or not, the government, or anyone else for that matter, has no right to force you to buy anything just for the simple fact that you breathe air. Obama signed into law a tax on all living people with the signing of Obamacare. So, because you're alive you are slapped with a tax until the day you die. It's a complete disgrace. This mandate is just one of the terrible things about Obamacare. Imagine what we could be forced to buy next? The federal government forcing us to go to college? Or perhaps the federal government forcing all employers to employ no less than 20 people? Or maybe they want everyone to buy cable. Mandating that anyone buy anything is not right in the least. And there is much more wrong with Obamacare than just the mandate and these other points I made.  Forcing insurance companies to cover pre-existing (PE) conditions without being able to charge more is another blow to our liberty and freedom. When the government mandates that insurance companies must cover pre-existing conditions and must do so without charging more, you leave the door open for consumers to abuse this system. Obama effectively gave people the option to get insurance AFTER they get sick without consequence of higher prices. That is, by definition, not insurance. And then, when that person is no longer sick they can hop off their plan. Do you understand the economic effect of this? This is the reason why insurance premiums are skyrocketing. When someone hops on with a PE condition and then hops off during open enrollment, that person is paying $100 for $1,000 worth of medical care. My numbers of fictitious, but the concept remains the same. Imagine if you had a business where customers paid a monthly fee of $50 so that at any time they may withdraw $1,200 when they needed it. Well, the federal government decides to pass a law that says you cannot deny people that don't have a monthly subscription and need immediate financing. And now people can come in and give you $100 and in return you give them $1,000. Your business would be an epic fail except you did two things to combat this new law. 1) You raised your customers' monthly subscriptions from $50 to $75; and 2) You now require that monthly customers pay a $25 deductible before they are allowed to have their $1,200. As a business person, these changes were necessary because you were not allowed to deny walk-in customers that were exchanging their $100 for your $1,000. This is how Obamacare is affecting the insurance market. Insurance companies have to find a way to not lose money. Raising premiums and deductibles for paying customers is the only way to do it.  In a perfect world, everyone buys health insurance before they are sick. And despite the fact that we don't live in a perfect world, there were still ways to get health insurance - and I'm talking pre-Obamacare - if you didn't have it before getting sick. You could have gotten a job that offered medical coverage in a group insurance plan. These plans always covered PE conditions. These plans are (still) required to cover PE conditions.  I am not a bad person. I'm not greedy, either. I believe in social support system for those that truly need it. Sometimes people are born into bad situations or sometimes people can slip up and hit some bad luck. I am more than fine with helping those people out. But when the government puts their hands too deep into my pockets, it isn't just money they are grabbing. I spend over 40 hours a week at a job. That job is where I (obviously) make my money. Time is money. And so when the government is constantly creating new welfare programs, the government is taking time from my life. This is time that I want to spend with my friends, wife, mother, father, sister, and daughter. Time is limited for everyone and I want my time outside of my 40 hours at work. THAT is my right. That is all of our rights.  You know, even the crazy, loony toon, socialist Bernie Sanders says that those people that work 40 hours a week deserve to make a living wage. Well, if companies weren't regulated so much we'd sure as hell have more money in our pockets. Less government regulations means more competition, more availability, more choices, and better prices. Look at the grocery store industry (i don't know the proper industry term). We have Shop Rite, Acme, Whole Foods, Publix, Wegmans, BJ's, Costco, Traders Joe's, Wawa, Sheetz, and so many more. Look at how stocked our supermarket shelves are...all the time. The only shortages that ever happen are when forecasts call for snowstorms and all the ice melt is gone. Other than that, shelves are stocked, food is fresh, and prices are excellent. And you don't have just one brand of sliced bread, or a single brand of peanut butter, or regular butter, or lettuce, or crackers, soup, meats, on and on and on....you have many brands for many products. We have 13 different kinds of milk in our grocery stores. Almond milk, soy milk, whole milk, 1%, 2%, organic milk, organic 1%.... The government didn't do any of this. People did. Smart. hard-working people did this. There is a market of consumers that want that stuff. And people made business to supply the demand. This is how things work. This is why we are the greatest country on this planet in the history of this world.  Running water in your home. Central air. Life-saving surgery/drugs and physical therapy. Being able to turn on and off electricity with a switch. Make a pot of coffee right at your kitchen counter top. Read GoT right on your e-reader. Wash and dry your clothes in your own home. Print a document. Cars/motorcycles/segways. Contact lenses. Run on the treadmill. Play music on your bluetooth speaker from your Mac Book Pro. And this list can go on virtually forever. The government did not of this. People did. And if the government can get the hell out of our way, we can continue to improve the quality of life like we have been for hundreds of years now in this country. I filed all my tax returns when I was abroad so they know how much I   made (just not how much I saved). I smell problems here. If you were compliant wrt to your filings, you must have filed FBAR forms and form 8938. Even if you were below the threshold for form 8938, you will probably be above it when you move back to the US - the threshold for people living in the US is much lower. Do I still need to declare it, even though I might not intend to use   this money to help my kids through college? I believe so. Here's what they want: Nothing there suggests that it is only limited to the accounts in the US or to the money you intend to use to help your kids through college. "You are not the only one with this problem. When Intuit changed their pricing and services structure in 2015 a lot of people got angry, facing larger fees and having to go through an annoying upgrade just to get the same functionality (such as Schedule D, capital gains). You have several options: (1) Forget Turbo Tax and just use paper forms. That is what I do. Paper is reliable. (2) Use forms mode in Turbo Tax. Of course, that may be even more complicated than simply filing out paper forms. (3) Use a different service. If your income is below $64,000 the IRS has a free electronic filing service. Other online vendors have full taxes services for less than Turbo Tax. (4) Add the amount to ordinary income. Technically, as long as you report the income, you cannot be penalized, so if you add the capital gain to your ordinary income, then you have paid taxes on the income. Even if they send you a letter, you can send an answer that you added it to ordinary income and that will satisfy them. Of course you pay a higher rate on your $26 if you do that. (5) If you are in the 15% or below income bracket you are exempt from capital gains, and you can omit it. Don't believe the nervous Nellies who say the IRS will burn your house down if you don't report $26 in capital gains. Penalties are assessed on the percentage of TAXES you did not pay (0.5% penalty per month). Since 0.5% of $0 is $0 your penalty is $0. The IRS knows this. The IRS does not send out assessment letters for $0. (6) Even if you are above the 15% bracket, there is likelihood it is still a no-tax situation (see 5 above). (7) Worst case scenario: you are making a million dollars per year and you omit your $26 capital gains from your return. The IRS will send you an assessment letter for about $10. You can then send them a separate check or money order to pay it. In all honesty I have omitted documented tax items, like taxable interest, that the IRS knows about many times and never gotten an assessment letter. Once I made a serious math error on my return and they sent me an assessment letter, which I just paid, end of story. And that was for a lot more than $26. The technical verbiage for something like this in IRS lingo is CP-2000, underreported income. As you can see from this official IRS web page, basically what they do is guess how much they think you owe and send you a bill. Then you pay it. If you do so in time, you don't even get a 0.5% interest penalty on your $6.75 owed or whatever it is. (8) Go hog wild. As long as you are risking an assessment on your $26, why not go hog wild and just let the IRS compute all your taxes for you? Make a copy of your income statements, then mail them to the IRS with a letter that says, ""Hi, I am Mr. Odinson, my SSN is XXX-XX-XXXX. My address is XYZ. I am unable to compute my taxes due to a confused state of mind. I am hereby requesting a tax assessment for the 2016 tax year."" Make sure you sign and date the letter. In all probability they will compute the full assessment and send you a bill (or refund)." "The government thought of that a long time ago, and has any loophole there plugged. Like if you set up a company to buy a car and then allow you to use it ... You can use the car for company business, like driving to a customer's office to make a sales call or delivery, and the cost of the car is then tax deductible. But the company must either prohibit personal use of the car, or keep a log of personal versus business use and the personal use becomes taxable income to you. So at best you'd get to deduct an expense here and then you'd have to add it back there for a net change in taxable income of zero. In general the IRS is very careful about personal use of business property and makes it tough to get away with a free ride. I'm sure there are people who lie about it and get away with it because they're never audited, but even if that causes you no ethical qualms, it's very risky. I don't doubt that there are people with very smart lawyers who have found loopholes in the rules. But it's not as simple as, ""I call myself a business and now all my personal expenses become tax deductible business expenses."" If you could do that, everybody would do it and no one would pay taxes. Which might be a good thing, but the IRS doesn't see it that way." The technical answer is defined by the laws of state you live in but most (all?) states with a sales tax have some form of use tax. Where if you buy something in another state for use in your home state you are technically liable for sales tax on it regardless of whether the merchant charged you tax on it or not. I don't think many people actually pay the use taxes, and enforcement generally seems rare. Under what section do I declare my profits when I pay tax? You have to declare this as income from other source and pay tax as per tax brackets. I'm from India and have been trading in binary options for a while now Trading in India on binary options is illegal. If you are using Forex from India for trading, this is not allowed as per Foreign Exchange Management Act. W9 is required for any payments. However, in your case - these are not payments, but refunds, i.e.: you're not receiving any income from the company that is subject to tax or withholding rules, you're receiving money that is yours already. I do not think they have a right to demand W9 as a condition of refund, and as Joe suggested - would dispute the charge as fraudulent. One other consideration. If you are a US citizen or Resident Alien, you are going to owe US income taxes regardless of where you earn the money. Here it is straight from the horse's mouth: Tax guide for US Citizens living abroad