US trader using a broker in switzerland

[texwest2]

I have heard a lot of different stories about capital gains tax and how to legally claim your forex profits. I am a US based trader that used a broker in Switzerland. I have heard you don't have to file for capital gains tax since the broker is in Switzerland, but I would have to file my profits as normal income tax. Is that correct?

 

[traderdj]

I have heard a lot of different stories about capital gains tax and how to legally claim your forex profits. I am a US based trader that used a broker in Switzerland. I have heard you don't have to file for capital gains tax since the broker is in Switzerland, but I would have to file my profits as normal income tax. Is that correct?

The geography of your broker is irrelevant. You are a US resident, so are taxed on worldwide income. End of discussion. Oh and you need to report the foreign trading account details each year to the IRS as well.

(Spot) forex profits aren't usually included as capital gains, rather, they are included as normal interest income or 'other income' on your 1040 and taxed at your top marginal tax rate.

 

[stochastic]

If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement, a Form 1099 (Information Return) or the foreign equivalents. See Publication 525, Taxable and Nontaxable Income for more information.

Additionally, if you are a U.S. citizen or resident alien, the rules for filing income, estate and gift tax returns and for paying estimated tax are generally the same whether you are living in the U.S. or abroad.