Discussion of Forex Trading and Currency Trading

How do taxes on Forex work?

I might start trading currencies in a little bit but I was worried a little about the taxes on forex. I understand there is no limit on day trades in forex right? So if there are no limits I might end up doing 10 trades per day. Additionally, the forex market is open all day so this gives me even more time to trade. Come time to file my taxes, do I have to report every single trade I made and the profit/loss on each of those trades? Or do I just have to submit my profit/loss overall? If I end the year with a thousand trades or something I don't know what I will do if I have to report each and every one individually!

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This entry was posted on Thursday, April 23rd, 2009 at 7:48 am and is filed under forex trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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One Response to “How do taxes on Forex work?”

  1. dnldslk Says:
    April 23rd, 2009 at 7:48 am

    Computing taxes on commodities is a breeze. Your broker will send you a statement at the end of the year in which your total profit or loss is reduced to one figure. In other words, you don't have to itemize each trade for the IRS as you do with stocks.

    Makes no diff if you traded a million trades or only one. You still end up with one simple fig for the IRS.

    You get one figure, then divide that fig into 60 percent of it and 40 percent of it. One fig goes on your Sched D as long term cap, the other as short term.

    Your broker may even send you the IRS form you use to do that easy sixty forty calculation before transfering the number to your sched D.

    Couldn't be easier. Don't need a tax pro to do your taxes.

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