@worldtraveler78 wrote:
Thank you for your response... Yes, I am a US citizen and stay in the United States. I am trying to gather more details on this FTA reference. I am using this exchange: https://www.ltg-goldrockb.com/#/home for trades. This is the first time that I am trying to withdraw money, so hopefully this is not a scam.
We can't tell you exactly what is going on, but we have seen this question before and we are concerned the exchange is scamming you.
Under US tax law, you are required to pay capital gains tax on your gain, the increase in value from the purchase price to the selling price. Gain is taxed at 15% for most people and 20% for some. There is no US tax law that requires a foreign company to withhold US tax. If someone is not a US citizen and has US income, under some circumstances, US tax law may require the US payer to withhold tax. But US tax law is not binding on foreign entities. Assuming this company is registered in country X (not the US) they would follow X's tax laws and you might owe capital gains tax to X, but the IRS can't force X to enforce US tax laws against a company registered in X.
Further, even if there is a legitimate need to withhold taxes from the sale, there is no reason to pay those taxes in advance. If you cash out $1000 and the exchange claims to need to withhold $250, there is no reason they can't cash you out and pay you $750, and send the rest to the IRS. It is a big warning sign that they want to you pay the tax in advance.
We can't tell you what to do about your situation, but it has nothing to do with US tax law.
