Taxes and IRS reporting
- Thread starter $$$lover
- Start date
While the IRS has not clearly stated whether FCMs need to issue IRS Form 1099s to clients in respect to forex trades, if FCMs do report trading information, it would be on Form 1099 (which is generally due by the end of January each year).
I think the firms are mixed whether they report or not.
I think the firms are mixed whether they report or not.
This is a nightmare to me as well.
For now, what I found out to report gain/loss on Forex trading to IRS is using form 6781. Especially this is the only way to report loss as a individual tax payer I guess. To stick with section 988 mentioned the below article, you have to attach a list of contracts under thise election.
A very famous article about forex taxes is:
http://www.forex-day-trading.com/forex-taxes.htm
Many of efile service provider I checked didn't support the form so I used TurboTax eventually.
Maybe I'm wrong so any other info. would be greatly appreciated.
For now, what I found out to report gain/loss on Forex trading to IRS is using form 6781. Especially this is the only way to report loss as a individual tax payer I guess. To stick with section 988 mentioned the below article, you have to attach a list of contracts under thise election.
A very famous article about forex taxes is:
http://www.forex-day-trading.com/forex-taxes.htm
Many of efile service provider I checked didn't support the form so I used TurboTax eventually.
Maybe I'm wrong so any other info. would be greatly appreciated.
It's probably worth talking to an accountant....as boring as they may be you don't want to end up paying one after you get audited....
Just pay the taxes on the interest earned portion of you income and the trading portion of your income. Live without the worry...I pay my taxes quarterly...
Michael B.
Michael B.
Quote from $$$lover:
Hi:
Does anyone know how are FX profit/losses reported to the IRS if at all.
I just called my broker (Refco FX), they said they do not report anything to me or the IRS.
Thank you for your help.
Of course Refco dosn't report this to the IRS. They odviosly are not planning on giving anyone there money back. So there are no gains to report.
It's a sad story about RefcoFX... I would think that if your account is frozen so that you eventually may not see anything back, you should at least be able to bring it up as a loss. I just hope for everyone involved that things gets resolved before tax timeQuote from ZoneTrooper:
Of course Refco dosn't report this to the IRS. They odviosly are not planning on giving anyone there money back. So there are no gains to report.
Edit: I have a question myself. Does anyone know how managed currency trading accounts are viewed by the IRS? I closed an account last year with a small profit.
any good accountant should be able to help you on this issue
Forex is taxed one of two ways.
If you make an internal record that you are trading 1256 Contracts, then you are taxed with a 60/40 split long cap gains/short cap gains.
Meaning, if you are profitable at years end, put a letter in your file cabinet and post date it 1/1 of the profitable year and sign it. (Hmm, probably not the honest thing to do, but who would know. I'm always profitable from year to year so this is not a problem for me.)
If you are unprofitable, hmm, forget the exact section of code, but I believe its 981 or something like that. This allows you to claim the whole loss right from your income.
And if you are a Refco Customer and profitable, you'll end up paying taxes on your profits, even though you can't get to those monies. (Which is where I fall in.) Your doomed, just doomed if you don't have the money some place else. Because the IRS just doesn't care. They will make you pay penalties. Your doomed I say. Because it is clear now that those monies will not be unfrozen until after April 15.
If you make an internal record that you are trading 1256 Contracts, then you are taxed with a 60/40 split long cap gains/short cap gains.
Meaning, if you are profitable at years end, put a letter in your file cabinet and post date it 1/1 of the profitable year and sign it. (Hmm, probably not the honest thing to do, but who would know. I'm always profitable from year to year so this is not a problem for me.)
If you are unprofitable, hmm, forget the exact section of code, but I believe its 981 or something like that. This allows you to claim the whole loss right from your income.
And if you are a Refco Customer and profitable, you'll end up paying taxes on your profits, even though you can't get to those monies. (Which is where I fall in.) Your doomed, just doomed if you don't have the money some place else. Because the IRS just doesn't care. They will make you pay penalties. Your doomed I say. Because it is clear now that those monies will not be unfrozen until after April 15.