US Taxes on Forex profits

[AtlanaAnna]

I have been trading very successfully for about a month. I'm feeling like family is wanting to put a damper on my joy. One of them is talking tax liability and saying there may be an additional 25% taxaction on profits from trading............ almost as if to say I shouldn't trade because profits are subjected to tax laws. Duh! Of course any source of income is subjected to our tax laws but that's not a reason not to trade!!! Does anyone know what he is talking about? Thus far, I've read on the Internet that most accountants handle Forex trading profits wrong. Apparently, there is a whole culture of accountants that specialize in filing taxes for Forex traders because of the complexities of the laws and the tax liability that can fall on someone if their profits are mishandled. That's all I know thus far. Thanks to anyone who can help with this question.

Sylvia

 

[Crap Buddist]

I have been trading very successfully for about a month. I'm feeling like family is wanting to put a damper on my joy. One of them is talking tax liability and saying there may be an additional 25% taxaction on profits from trading............ almost as if to say I shouldn't trade because profits are subjected to tax laws. Duh! Of course any source of income is subjected to our tax laws but that's not a reason not to trade!!! Does anyone know what he is talking about? Thus far, I've read on the Internet that most accountants handle Forex trading profits wrong. Apparently, there is a whole culture of accountants that specialize in filing taxes for Forex traders because of the complexities of the laws and the tax liability that can fall on someone if their profits are mishandled. That's all I know thus far. Thanks to anyone who can help with this question.

Sylvia

Hello I'm well out of my depth here, but I don't like the idea of negative family poking their noses in and holding enthusiasm & passion back ! Still it happens but, you may have to work double hard to ease their concerns/worries, and if you really get into FX full on, they might be worried that they have less of your time.... So make sure you party hard with them when you are free....

That said I found this blog which might give you pointers..... Also I assume your IRS will have a tecnhical Tax advice phone number, so give the IRS a call they should be able to assist further....

Forex Tax - A New Approach

Seems like they treat different FX products slightly diff. Spot, futures, forwards etc..

Obtaining tax savings for individual forex traders: a hassle but well worth it | Managed Forex Trading Accounts with Oanda FX Manager | Spicecap.com

When you find the definitive, let us know ........

It might be that if you trade currency futures, then handling the tax issue might be easier as opposed to trading spot fx?

hmmm Could you trade via an offshore Spot FX, then pay tax when you draw into the US ?

But having a quick skim of that blog it suggests currency futures would be easier ?

I thought about suggesting waiting till year end ,see what the profit situation is ,then worry on it ,seems a tactic some people still us, according to below.
Forex Taxes - Do I have to Pay?

 

[AtlanaAnna]

Thank you for lifting my spirits over the family issues and thank you for the IRS link. Sounds like a good place for me to start reading. May all your trades be winners! Sylvia

 

[Crap Buddist]

Hey, no probs. In fact the family can be a greater issue than a tax issue, and in some ways it should be. But especially if a retail trader is trading from a home office.

Then, other family members can often get expsoed to forex thinking, for want of a better term. And it could be that all their worries and concerns over trading (and they don't even trade) are displaced onto their loved ones. YOU !

Hopefully with some open honest discussion and family time you should be able to politely inform them that you are doing something you really enjoy/love and , thank them for their continued support!

But, you may need to distance them from your trading whilst you are engaged, so you can focus 100% and perform to your best. Not sure how long you trade in the week but, if you need to be available to trade FX x hours, then try and let people know & understand. DO NOT DISTURB (unless v.urgent). Politely of course.

You could convert all family discussion output of your trading progress to points, instead of dollars, for their own good,(and yours as then your family will not attach money concerns as easy)if they are asking about how your day/week went. You'll have to gauge this, depending if they are "trading grown ups" or not. So you will have to parent the situation.

Tax issues ? piece of cake, Family issues ? Good luck ! you'll sort them out.

 

[AtlanaAnna]

You sound pretty smart........................ seasoned with some wisdom. I have so many questions about all this but my other questions aren't about Taxation and Accounting. I'm going to go post under the Day Traders section.

Thanks!
Sylvia

 

[AtlanaAnna]

Actually, the Trading from Home secion.

 

[luckyd1976]

I would reccommend...

TRADERS
Been using Mr Green for years. Highly rec'ed

 

[AtlanaAnna]

Thanks for that tip. I'll check him out.

 

[Depth Trade]

Do not pay your taxes, complete thiefs.

Wait until they raid your home.