IB: Forex Tax reports????

Discussion in 'Retail Brokers' started by lemeeeplay, Apr 10, 2009.

  1. I am trying to do my taxes and noticed that none of the IB tax reports include my forex trades.

    Report 1256 has my futures trades
    Schedule D has my stock and options trades
    1099-INT has net interest

    I did a lot of Forex trades last year, how do I get the net for it? Or do i need to go through every trade and calculate the net myself???? That would be a pain in the neck.
  2. Catoosa


    Forex is the wild wild West when it comes to the IRS and taxes. You will need to keep up with your own forex transactions and IRS tax reporting. I would recommend electing to report the transactions as 1256 transactions. A Goggle search on tax reporting forex transactions will give a lot of information on the subject.
  3. Thanks for replying

    This is so messed up :(

    I think I will need a software to help me go through all my forex trades and tally up the totals, otherwise it would take some time to do it manually because I did hundreds of trades last year :(
  4. nravo


    I am in the same boat, and then you have to factor in the interest paid and accrued, the carry. IB does not have it together with regard to cash FX and taxes. You have to do it manually, not each trade, but look at the in and out balances at year end for each pair, if you have an open position at one end or the other that a has to be factored in, too. It's a pain but it can be done fairly easily.

    Btw, technically, if you want IRC 1256 treatment of FX gains and losses you are supposed to get a letter in your file at the beginning of the tax year stating this.

    You may want to look at the IRCs to see who has to file FX gains and losses, if you trades were small. Obviously, if you make money cashing in Euros from a long European trip, you aren't supposed to claim a gain or loss.I think the use of a broker may be the determining factor.
  5. That's exactly what I ended up doing too.

    I downloaded the monthly activity report and then went through each one and got the total for each currency. That itself was a pain in the ass, because IB doesn't list a simple P/L for Forex transactions like it does for other transactions. Also, I didn’t bother tallying up interest, because it was way too complicated already and my account is small so it's probably not significant.

    I entered the amount in one line under Schedule D with the description "Net gains & losses from FOREX trading" and used 12/31/08 as enter/exit date.

    I probably didn't do this 100% according to the rules, but then the rules are foggy to being with, so I did the best I could.

    For this year, I might need to purchase a reporting software or maybe move away from cash Forex to futures forex. 1099b form makes doing futures taxes so much easier.

    Does anyone know if TradeLog supports Forex? Their website isn't too clear about this.
  6. nravo


    I don't think anyone, including FX brokers, does a good job with tax forms for cash Forex. It's too new, the nature of the beast, optional whether you do 1256 or not, and you have the carry to report as well. I don't know how small your account was but carry can be a big deal positively pr negatively, apart from FX gains or losses.

    Btw, know what you are doing with futures if you move away from cash FX. Leverage kills a lot of folks in futures FX. With cash FX and IB you can set your own levels, small or large.
  7. Do you know how to do this? Is there a form to file or is it just a matter of attaching a statement to the 2008 return saying this will be done starting in 2009?