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US citizens and residents are required to report their worldwide income, regardless where or how it is earned. It is perfectly legal to trade overseas as long as all income is properly reported. The profits from trades are treated as capital gains income and will need to be included on US tax return. If the same income had been already taxed by foreign government, the individual can claim credit for foreign taxes paid. Long term capital gains are taxed at reduced rate, depending on individual's total income, usually at 15%. Losses can be deducted however, there's limit of 3K capital gains loss per year. More losses will have to be carried forward to future years.
There are no FICA taxes, but the individual may be subject to additional Medicare tax, if his income total income is over certain threshold.
There's really no big difference between domestic or foreign trades. It is all capital gains. The only difference is the credit for foreign taxes paid and most brokers will issue you the proper tax statement to report it.