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Q2.In Currency Trading why are all profits expressed in US Dollars?
Q3.I need someones judgment on currency trading taxes in the United States?
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30 Apr 2010 9:52:41 AM  
Q1. tax currency profits?  
how do they tax currency trading profits?  
The best answer for Q1...  
Hi DH, You have a very interesting question which very few people thought about. The bottom line is where is your country of resident where you are supposed to be paying tax? I would suggest that you seek professional advise first, but this what I can share with you: 1. If you are a tax paying resident of USA, then I would suggest that you purchase the "Tax Guide for Traders" by Robert A. Green, who is a CPA. It is an excellent book with respect to the special treatment that traders can get on their taxes in the US. 2. In Switzerland there is NO tax for non-resident in Switzerland. However, you are advised to declare your FX gains in the country where you are tax resident. Thus if you are tax resident in the USA you should declare your FX income in your IRS tax returns. For Swiss residents, it get much more complicated, depending on where you live, if you have other job, if you are independent, or if you are retired. However, due to current Swiss privacy laws, which prohibits government from seeing your account (let alone your gains) it is up to you to declare what you earned. Please seek professional advice! EVEN THOUGH IN SWITZERLAND TAX EVAISON IS NOT A CRIMINAL ACT, IT SHOULD BE IN MANY OTHER COUNTRIES!!! Thus all tax residents out side of Switzerland should declare their income to their respective tax authorities. 3. Luxembourg is the same as Switzerland. 4. France: you have to report and expect to pay taxes. 5. In the UK: The best solution is spread betting as it is tax free but up to 40% tax if done as normal spot forex. But losses and expenses are not tax deductible unless the IR (Inland Revenue) considers you a professional trader. So if you are CFTC registered and has worked as a trader before, in a bank or investment fund, this is not for you as you will be paying standard income tax rate, which will vary depending on earnings. Once again, if you are a USA tax resident you are expected to declare all your earning to the IRS in the USA. 6. In Canada, you have to pay gains on forex profits just like earned income. But you can relinquish your citizenship for another country with more favorable taxes. In conclusion..... What is important is in which country you are a tax resident, not where you have your account or where the taxes are less. The best is to live and trade in a No Tax Zone. If you insist in living in a high tax country, then set up your company which will then pay you a salary to trade for your company's account. It will be cheaper in the long run. My parting words are always learn, practice and discipline. a. Always be keen and humble to learn. There is no end to learning. b. Always practice whatever new things you learned in demo account. If you cannot survive and prosper in your demo account, you time of trading live has not come yet. c. Always maintain trading discipline. This can only be cultivated in diligently practicing in your demo account. I had never appreciated this aspect until I kept busting many demo accounts.  
7 Nov 2008 11:10:1 AM  
Q2. In Currency Trading why are all profits expressed in US Dollars?  
The best answer for Q2...  
Actually they aren't. Only trading US Dollars are expressed in US Dollars. If you buy any foreign currency, you are buying that currency priced (expressed) in that currency.  
22 Oct 2008 3:44:12 PM  
Q3. I need someones judgment on currency trading taxes in the United States?  
I have traded. Made profits and losses. My concern is what is taxed, the final outcome of my account (tax net profit?) or all the times I have profited at each trade. Do not know how these taxes work and need an internet source to look it up. Regards.  
The best answer for Q3...  
IRS has web site. Then booklets for specific subjects you can order, no charge.  
17 Oct 2008 1:33:54 PM  
Q4. When you profit from trading currency, who gets gypped?  
Say you buy some Euros and later the exchange rate goes up. You sell the Euros and make some money. Where does the profit come from?  
The best answer for Q4...  
It isn't poker, it isn't a "zero sum game". There are not necessarily losers, except for traders who don't know what they are doing. Person A buys Euros. Person B wants to buy Euros and Person A at the same point wants to sell Euros. As long as the bid and ask match on any transaction there is no cheating, no theft, no one got "gypped". Some people trade such futures and others are there for their business needs. A bank or business has extra currency of anybody but needs (now or in the future) some more Euros. They sell the other currency and they buy Euros. Matter settled. Now the account or inventory manager moves on to the next issue in his business. Someone says, I was prepared to buy that product from Japan in Yen, but they say they have to pay their supplier in Euros. That person makes one or two trades, depending on what the brokerage account permits and their base operating currency: Sell x Yen, buy y Euros. Did the price go up in the meanwhile? Well they could wait for a better price or just say, If I want this done and settled then I buy. No cheating, No robbing. No gypping.  
14 Jul 2008 12:30:8 PM  
Q5. What taxes are payable on currency trading profits for day traders in ireland?  
The best answer for Q5...  
Ireland ??? no idea .. in UK, "currency trading" is regarded as gambling = the 'Bookie' (Currency Trading 'house') is Taxed and the 'Punters' are not = so no Tax to pay on profits (and no Tax relief on losses)  
13 Jun 2008 12:32:40 PM  
Q6. How to report profit/loss incurred from Currency Trading on Canadian Income Tax. Its not Capital gain or loss?  
Hi, How to report profit or loss incurred from Currency Trading on Canadian IncomeTax Return. It doesn't fall inot Capital gain or loss Category. Please help  
The best answer for Q6...  
Line 130 of your T1. if it's strictly currency trading i.e. speculation on the exchange rate itself. If the currency gain or loss is associated with a stock transaction (i.e. buying a stock in a foreign currency account, then selling it) then the currency gain/loss is part of the capital gain/loss.  
17 Mar 2008 2:42:21 PM  
Q7. What is the capital gains tax rate for currency trading?  
I know that with stock trading, it's 28% and 15%, but I'm not sure what the rate is for currency trading profits. I heard that it's a bit confusing.  
The best answer for Q7...  
Its 15 percent for now. But more than likely will be going up depending on who gets elected.  
12 Mar 2008 3:18:49 AM  
Q8. How can I make a profit through currency trading?  
I earn Thai baht, and it's gaining buying power. How can use this market fluctuation to my advantage in regards to exchanging currency for a profit? Thanks for your time!  
The best answer for Q8...  
Simple. You use your baht to buy a foreign currency that you think will increase in value relative to the baht. When it goes up in value you sell it. The other approach is to sell currency that you think will go down in value relative to the baht. When it goes down you buy it back at the lower price. Of course your evaluation has to be correct to make money. If you are wrong, you will lose money. There is risk involved in currency speculation.  
4 Jan 2008 9:09:26 PM  
Q9. How do you convert profits in foreign currency in Interactive Broker's TWS ?  
How do you convert profits in foreign currency in Interactive Broker's TWS ? it seems that when im trading foreign stocks in another currency, the profits are directly accumulated in the foreign currency. is there an auto function to auto convert all P/L ?  
The best answer for Q9...  
There's no auto function that I know of. You have to sell your Euros (or whatever currency) for dollars at the going rate and pay a trading fee. But you don't need to worry about it until you sell the shares.  
17 Apr 2007 4:33:36 PM  
Q10. I hear many people make a good living from profits in currency trading. Who pays for those profits?  
The obvious answer that occurs to me is, "the othrer punters pay". But in that case it is all a matter of luck, with a zero sum, since no one knows what the currency market will do.  
The best answer for Q10...  
I hear different. Not many people can make money from currency trading. However, you only need to understand it a little more than others and you will have an edge. The money in the forex market will be distributed according to losers and winners. There is some kind of a balance between the two.  

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