Do I pay taxes on earnings for the year even if total account is a loss?

[speedo]

I'm kind of surprised no one mentioned it yet here, (...amateurs,)

There's a loophole, or way, to skirt that $3000/year maximum loss deduction...in a little something called Trader Tax Status, and selecting Section 475 mark-to-market for accounting.
(further look into it yourself for all the exact details.)

If you trade full-time, you do it in significant amounts all day, then you're technically defined as a professional trader. And you can deduct All of your losses againsts your gains.
This is only for US tax law though. You mentioned Forex, most forex traders are international people.

Yes but you can't retroactively select 475.

 

[zdreg]

Be serious, this section is called Taxes and Accounting, so you must be trolling. Sounds like I don't need to worry about taxes in this scenario, so I will save my time and money.

"Sounds like I don't need to worry about taxes."
you got it right: sounds like. that doesn't make it a slam dunk.

"so you must be trolling."
I made a mild reply and you snapped back.
that kind of behavior doesn't forebode a successful trading future

lots of luck.

 

[tupchurch]

It takes a lot less time and effort to just make a $500 trade to pay for it. After all, we're profitable traders, yes? And it is better to spend the extra $460 on a CPA than burritos if you have a spouse. *think gaseous anomalies*

Hehe, ok, we are just getting silly now. I think the OP has enough opining here to make his own choice. Peace out Scat, see you in the next thread.

Yes, thanks for the information, it was definitely helpful.

 

[sprstpd]

I have a FX account and I have put about $20,000 cash into the account. I have had about 4 losing years and last year my account started at about $5,000, a $15,000 loss in the account since I started. This year, my account has risen to $7,000, a $2,000 profit for the year, but still a loss in the account since I opened it. Would I need to pay tax on the $2,000 even though I haven't actually made any money? Please help me understand how losses roll from year to year. Thanks

My brain is telling me that if this is just FX trading, these could possibly be classified as ordinary income and can be reported on Form A, Line 21. In that case (and assuming these were closed out currency trades), you needed to report your loss in the year you had it. You might need to amend your returns from previous years. And there is a deadline to do this.