How are binary options taxed in the US?

This is a discussion on How are binary options taxed in the US? within the Fixed Odds & Binary Betting forums, part of the Markets category; Any ideas? I can't find any good info on this. Are they subject to being taxed for every winning trade, ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Nov 9, 2009, 5:59am   #1
Joined Sep 2008
How are binary options taxed in the US?

Any ideas? I can't find any good info on this. Are they subject to being taxed for every winning trade, regardless if you later lose that profit in a subsequent trade, or do you get taxed on the net gains of all your trades for the year?
snackly is offline   Reply With Quote
Old Nov 9, 2009, 7:39am   #2
Joined Oct 2009
How are binary options taxed in the US?

Quote:
Originally Posted by snackly View Post
Any ideas? I can't find any good info on this. Are they subject to being taxed for every winning trade, regardless if you later lose that profit in a subsequent trade, or do you get taxed on the net gains of all your trades for the year?
Options should be taxed the same way with capital gain/ (loss) on stock trading all gaaines after deducted for the losses are to be taxable but you can deduct a maximum of $3,000 of your total "net" loss and the balance is to be carried forward for deductions in the future years.

The least tax advantage in the US is gambling: horse, lottery betting. In these gambling ventures, you have to report all your winnings (less the losses during the year), you can't deduct the "net" loss, which means you can deduct all your losses up to the total gains for the year - you only deduct to the break-even level.

Individual taxpayer is a cash business tax payer, so if your option trading net gain $10,000 this year, you report $10,000 this year, and if your net loss is $10,000 in the following year, you can only deduct $3,000 on your option loss and the $7,000 balance will be forward to be deducted in the future years.

Hope this helps
songcon is offline   Reply With Quote
Old Nov 10, 2009, 12:38am   #3
Joined Sep 2008
snackly started this thread Thx, but what about CFDs at Nadex? Or spread contracts?
snackly is offline   Reply With Quote
Old Nov 10, 2009, 4:15am   #4
Joined Oct 2009
I believe that you have to pay tax since there is no specific provision in the tax laws that provides the tax exemption for those kind of "bettings". I did a preliminary research and found very interesting writing on the issue for the UK traders.

Sorry, I couldn't be any more helpful, if I run across a good answer in the future, I would let you know. And for now, the answer is yet, you have to pay taxes on the gain, the stamp fees should be consider as foreign tax and to be claimed for credit on your U.S. tax return

http://www.financial-spread-betting.com/Tax-free.html
songcon is offline   Reply With Quote
Old Nov 17, 2009, 5:26am   #5
Joined Sep 2008
snackly started this thread
Quote:
Originally Posted by songcon View Post
I believe that you have to pay tax since there is no specific provision in the tax laws that provides the tax exemption for those kind of "bettings". I did a preliminary research and found very interesting writing on the issue for the UK traders.

Sorry, I couldn't be any more helpful, if I run across a good answer in the future, I would let you know. And for now, the answer is yet, you have to pay taxes on the gain, the stamp fees should be consider as foreign tax and to be claimed for credit on your U.S. tax return

http://www.financial-spread-betting.com/Tax-free.html
Sorry to have not been more clear. I was referring to Nadex specifically, which is a US operation and CFTC regulated "version" of IGMarkets.
snackly is offline   Reply With Quote
Old Nov 17, 2009, 8:50am   #6
Joined Feb 2004
Quote:
Originally Posted by snackly View Post
Sorry to have not been more clear. I was referring to Nadex specifically, which is a US operation and CFTC regulated "version" of IGMarkets.
Nadex offers exchange traded options, not CFDs, so the tax will be as for options.
ns1000 is offline   Reply With Quote
Old Nov 17, 2009, 5:36pm   #7
Joined Sep 2008
snackly started this thread
Quote:
Originally Posted by ns1000 View Post
Nadex offers exchange traded options, not CFDs, so the tax will be as for options.
I see so it doesn't matter that they're digital options, they're taxed exactly as vanilla options?

Also nadex has capped futures, how are those taxed? Anyone know.
snackly is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Binary options for dummies Iceberglettuce Fixed Odds & Binary Betting 42 Jan 19, 2014 9:42am
binary options/bets kinkeadfx72 Fixed Odds & Binary Betting 11 Mar 5, 2010 12:43am
Vix binary options Estrend Futures & Options 2 Feb 23, 2010 1:03pm
Binary options broker Estrend Brokerages 1 Feb 23, 2010 12:56pm
Anyone heard of myeztrader.com? Binary options up to 81% wokaihwokomas Forex 1 Oct 12, 2009 12:36pm

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)