Hi, This past year was my first year trading ForEx. I do my own taxes with Turbotax. Are ForEx profits entered the same way I would enter Futures profits? If not, can someone please tell me what I need to do to enter them correctly? Thanks emini_trader
I've wondered about this myself and suggest you do an Internet search. What you will find is that while tax reporting, wash sales and long term versus short term capital gains rules are clear for stocks and futures, not so for forex. The first problem is that forex gains/losses are not reported on a 1099 form. So you need to keep track of your trades to determine your P/L. And if like me you are trading cross currencies (i.e. don't involve my base currency of USD), the record keeping and calculating translation gains/losses is at best a good faith estimate. The second problem is that it's not clear whether forex profits should be split between long term/short term as are futures. That is, I don't think you'll find it stated in the tax code. I did a search on the IRS web site and found nothing relevant for foreign currency transactions. What I'm planning to do is report it as a single line item on one of the capital gains forms and clearly mark it as foreign currency transactions. No details will be provided (same as futures transactions). I'm hoping that my reporting of something more than their own records indicate (since it's not on a 1099 report) will keep them happy and avoid questions. If anyone else has a different approach, please let us know.
Hurricane, That's what I was planning on doing as well. Just going to record the P/L in one line like I do for futures. If I hear anything from any other sites I'll let you know. Thanks for your help emini_trader
Use TradeLog (http://www.armencomp.com/tradelog) to do your trading taxes. There is no viable alternative, IMHO.