Hi Traders, Do any of you have brokers that report your forex trading activity to the IRS? None of my brokers ever have, due, so they say, to the "international nature of forex trading," whatever that's supposed to mean. If the IRS is never apprised of retail forex capital gains on the part of traders, why can't traders pretend they aren't making any profits for purposes of tax evasion. This is of course purely hypothetical and would be illegal in practice, but couldn't it be done with complete impunity? How would the IRS know whether or not forex traders are liable for taxation? What they don't know can't hurt us, can it?
Pretty smart to leave a paper trail with your IP address & the words TAX EVASION, second, I will assume you never had a profit and withdrew the cash leaving a money trail to your Fx trading account? You are certainly not the sharpest!
If you omit reporting something your broker hasn't reported on a 1099 form, it would be difficult to be caught. But . . . 1) You might randomly be subject to an audit including a review of your broker statements. 2) When your broker is audited, it might include an examination of their reporting practices which could track bank to their clients (think UBS and offshore bank accounts). Not reporting is tax evasion and the penalties are steep, including possible loss of freedom and a new roommate. "I forgot because my broker didn't report it" won't fly.