Hi, I am wanting to start FX trading and have started to read on babypips.com. Still, I think part of the learning process is to be involved w/ a 'demo' platform. But before signing up, I wanted to know more about the 'tax' changes and 'tax' concerns for trading FX. With the stock market, a couple of brokers have TXF files which make it easy for turbo tax. However, I don't know if there is something comparable for FX. I have read about potential changes in reporting for FX, so I wanted to be prepared for it. Any insight to this? Thanks.
There are complicated choices available in how you report FX, including optional elections, bookkeeping options, and doubtful issues, so that a broker probably could not come up with one way to report it. Also the IRS does not have standardized reporting formats as they do for stocks. If you read the GreenTraderTax web site, there are discussions of the various possible approaches. Some of the law is unsettled as to what is permissible and what is not and some of it depends on how your trading is characterized. It is not black and white at all.
taxes are complicated really and im not sure how it works, but to scratch the surface I think it depends on the law of taxation in your country, for example i trade with hotforex and im from the philippines, what i earn from forex i receive as a whole!! the only fee i pay for is money transfer from moneybookers to my bank account and its like 1.8 EUROs, there is almost no regulated laws concerning forex here (not sure) but i do not get taxed for trading as of the moment. i guess taxes is one of the reasons why US residents are not allowed to trade of shore, even hotforex was pressured to decline US clients