Paying Taxes on Your Forex

The question often comes up about whether or not you have to pay taxes on your FX Trading. Unfortunately, just like any form of earning money, taxes have to be paid. However, just because they have to be paid doesn’t mean that you’re going to lose every penny that you earn using that Forex trading platform. Truth be told, there are quite a few loops you can get around when looking at having to pay taxes for Forex.

Because it is relatively new and not a lot of people do it yet, the IRS is unsure of how to tax it. So, they currently just follow the capital gains tax in which for the first sixty percent, you only pay 15% tax and then for the other forty percent, you pay 35%. So, you’re splitting your earnings up in two and then paying taxes based on that. So, while you are paying taxes, the bulk of your revenue is being taxed only 15% while the smaller amount is being taxed less.

Because Section 988 in the IRS book talks about interest and the such, opt out of it as soon as you start trading so that you don’t pay taxes as the exchanges change. The IRS allows you to opt out of it and when you do, you’ll go back to paying taxes with the 60/40 split which is, arguably, a much better method of working.