About currency trading taxes

About currency trading taxesOther People Are Reading

Significance

For most currency traders, 60% of their capital gains are taxed at the long-term rate and the remainder are taxed at the short-term rate. This results in massive savings relative to stock traders who are taxed almost entirely at the short-term rate. It may be more challenging and a bit riskier to trade currency futures than stocks, but part of the additional benefits accrue in the form of significantly lower tax rates.

Misconceptions

One of the major errors that many relatively new currency traders make is failing to make the distinction between the retail currency spot trade and the professional forward currency trade. The latter generally require larger minimum accounts and involve trading currency futures, not the actual currencies involved. The forward trade is taxed at the so-called 60/40 rate mentioned earlier, in which 60% of the gains are taxed at the long-term rate. The retail spot trade is taxed completely at the short-term rate.

Most of the newer arrivals to the currency trading scene are involved in the retail spot trade. They bring in inexperienced traders who are thrilled at the prospect of being able to make tons of money on the foreign exchange markets. These brokerages charge high fees and don't really inform their customers that they are going to be taxed at a much higher rate. Most of their accounts are under $25,000, though, so the gains are generally not so significant that massive portions of them are being eaten by the higher tax rates.

One very nice thing about Forex in regards to tax policy is that foreigners who engage in the trade are not taxed at all. This makes the market very attractive for people living in countries that tax investments at extraordinarily low rates or not at all, so long as they trade through an American broker. This helps to make the Forex markets more liquid, as many international businesses purchase substantial amounts of foreign currency in order to hedge against potential market fluctuations.

Maintaining a significant portion of a portfolio in foreign exchange futures is generally a rather risky proposition. Although it's very unlikely that anyone would lose the entire value of the investment, it's also very difficult to predict gains in the long-term. The favorable taxation rate makes it a good sector for professional short-term traders to monitor, but for people that do not have the time and energy to monitor this 24-hour-a-day market on an hourly basis, even the lower taxes are not enough to outweigh the considerable risk involved.

International sites-offices

International sites-officesInternational Sites Offices

Affiliate Offices

FXCM US - FOREX CAPITAL MARKETS LLC

FXCM UK - Forex Capital Markets Limited

FXCM Germany - Forex Capital Markets Limited

FXCM Australia - FXCM Australia Limited

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FXCM France - Forex Capital Markets Limited

Forex Capital Markets Limited operates under the commercial name FXCM France and is partially authorized and regulated by the FCA of the United Kingdom, and is registered with the Autorite de Controle Prudentiel (ACP), as the branch of Forex Capital Markets Limited. In addition, FXCM France is also subject to the regulatory authority in the following areas cited:

International Sites Offices

Affiliate Offices

FXCM Australia - FXCM Australia Limited

FXCM US - FOREX CAPITAL MARKETS LLC

FXCM UK - Forex Capital Markets Limited

FXCM Germany - Forex Capital Markets Limited

FXCM France - Forex Capital Markets Limited

Forex Capital Markets Limited operates under the commercial name FXCM France and is partially authorised and regulated by the FCA of the United Kingdom, and is registered with the Autorite de Controle Prudentiel (ACP), as the branch of Forex Capital Markets Limited. In addition, FXCM France is also subject to the regulatory authority in the following areas cited:

Thread forex taxhow much do you pay where you live

Thread forex taxhow much do you pay where you liveForex tax. how much do you pay where you live ?

if you have a strategy that is making you profit, then your strategy has an edge, meaning in the long term you'll be making more and more money ie the odds our in your favour. whereas in gambling, the odds are tipped slightly against the gambler so in the long term, the gambler losses money.

in the UK, forex itself if classed as spread betting, which is gambling, and gambling gains are tax-free. i can only imagine the fact the 95% of forex traders lose money can back up their case of why its considered a 'gamble'..

I'm from the UK, and you have this confused.

Spread Betting and trading Forex on a Margined account with the use of Leverage are two different accounts and as a result are regulated by two different authorities.

1. Spread Betting is regulated by the Gambling Authority - and thus the profits are (to a degree) treated as tax free

2. Forex on a leveraged account is regulated by the FSA - Profits are NOT tax free in the UK.

On both of the above accounts, any income from trading is simply added to your total income, and taxed accordingly. Neither are tax free! The catch is that the brokers state it's tax free, when what they really mean is that any profits up to and including your personal allowance are tax free. Any income from trading, or in fact gambling which exceeds this personal tax free allowance is taxable. Professional gamblers are taxed on there income, the HMRC tax office have an option on their tax forms which classifies you as a professional speculator - thus you WILL be taxed should you declare your earnings correctly.

This type of thread occurs here way to often and all the time people assume the UK is tax free spread betting/forex, this is simply not true. The source of the above information is directly from HM Revenue and Customs as I looked into this a few years back (when at the time I was also confused about the whole issue).

So in short, in the UK spread betting and Forex trading on leverage is tax free, but only up to your personal allowance. Income from trading/spread betting exceeding your personal allowance will be taxed in the usual way via income tax.

Awful events in paris will reverberate in europe

Awful events in paris will reverberate in europeAwful events in Paris will reverberate in Europe

Looks like a large-scale coordinated attack

France has closed its borders and declared a nationwide state of emergency. Multiple attacked have been taken place around Paris. There are reports of 4 to 7 separate attacks.

There are at least 60 dead but it's early and still ongoing. If those numbers are right it's the worst attack on France since WWII.

Everyone has had enough of this.

It's about to be a very tough time for Muslims in France and elsewhere because the public outrage will be far worse than Charlie Hebdo.

It's just a very sad, sad way to start the weekend. Our hearts go out to France.

Update: French police now report that two attackers at the theatre have been killed. Another sketchy report suggests a suspect was arrested.

Banksy posted this.

Update: It just gets worse and worse. CNN says 118 dead in concert hall, at least 40 dead in other locations.

Awful events in Paris will reverberate in Europe

Looks like a large-scale coordinated attack

France has closed its borders and declared a nationwide state of emergency. Multiple attacked have been taken place around Paris. There are reports of 4 to 7 separate attacks.

There are at least 60 dead but it's early and still ongoing. If those numbers are right it's the worst attack on France since WWII.

Everyone has had enough of this.

It's about to be a very tough time for Muslims in France and elsewhere because the public outrage will be far worse than Charlie Hebdo.

It's just a very sad, sad way to start the weekend. Our hearts go out to France.

Update: French police now report that two attackers at the theatre have been killed. Another sketchy report suggests a suspect was arrested.

Banksy posted this.

Update: It just gets worse and worse. CNN says 118 dead in concert hall, at least 40 dead in other locations.

Awful events in Paris will reverberate in Europe

Looks like a large-scale coordinated attack

France has closed its borders and declared a nationwide state of emergency. Multiple attacked have been taken place around Paris. There are reports of 4 to 7 separate attacks.

There are at least 60 dead but it's early and still ongoing. If those numbers are right it's the worst attack on France since WWII.

Everyone has had enough of this.

It's about to be a very tough time for Muslims in France and elsewhere because the public outrage will be far worse than Charlie Hebdo.

It's just a very sad, sad way to start the weekend. Our hearts go out to France.

Update: French police now report that two attackers at the theatre have been killed. Another sketchy report suggests a suspect was arrested.

Banksy posted this.

Update: It just gets worse and worse. CNN says 118 dead in concert hall, at least 40 dead in other locations.

Forex trading and taxes usa

Forex trading and taxes usaForex Trading and Taxes USA

The forex brokers anywhere only helps you in trading and the same applies in US as well. No forex broker in USA handles the trader’s tax issues as well. Thus, it is totally a trader’s headache to compute the gains and losses and then apply for tax deduction or tax dues payment. The forex tax discussed here applies only to US forex traders who trade with a brokerage firm in US only. The investors who are not a resident of US do not have to pay any taxes for making an investment and making profit with a brokerage firm in US. One should also note that the information provided here is only meant for educational purpose and should not be considered to be an advice for tax or investment. If any confusion or advice needed, kindly contact a tax professional for the same.

The forex trading is becoming a craze among the investors and so is the same with US traders. Due to increase in the foreign exchange trading more and more traders from United States have to deal with the taxation issue at the end of financial year. There are two types of taxation rules which the traders can choose. The traders who are involved in currency trade or the forex spot cash market can elect to be taxed under Internal Revenue Code Section 1256 which is also applied to regular commodities or special rules of section 988 which applies to Treatment of certain Foreign Currency Transactions. In general the section 988 rule applies for foreign exchange until unless the traders choose to opt out of it.

The forex brokers or the US companies that trade in foreign exchange are taxed under section 988 and so are the foreign exchange traders. Under section 988 the trader has the facility or getting tax deduction if he is under loss. Say for example while doing foreign exchange you show a capital loss of $13,000 and a capital gain of $10,000. In this case there is a loss of $3000 which the trader can show as tax deduction for any other source of income that he may be having. Thus, this means that the gains and losses from the foreign exchange are considered as an interest income or loss and the tax applies accordingly. However, the IRS has given the facility of opting out of the section 988 and allowing them to be considered under section 1256 as the daily fluctuations that happen in the foreign exchange can be considered as a part of the general asset as is a part of the regular course of his business.

The IRC section 1256 gives the foreign exchange traders advantage over the stock traders. By reporting the gains and losses from foreign exchange on the IRS form 6781, the traders have the advantage of splitting their capital gains on the schedule D using split 60% and 40%. This means that the traders are allowed to get the 60% of their interest taxed under long-term capital gains rate which is low and is somewhere around 15% and the remaining 40% of the capital gain under Short-term capital gains rate and the tax applied under it depends on the tax bracket that the traders falls in. The tax in this case can be as high as 35%. Thus, the overall tax on the capital gain is around 23% which is almost 12% less than the rate applied in case of regular short-term rate. However, if the trader feels that he has not gained much from the foreign exchange he can continue getting taxed under section 988.

Intermediate guide to e-mini futures contracts-tax advantages

Intermediate guide to e-mini futures contracts-tax advantagesIntermediate Guide To E-Mini Futures Contracts - Tax Advantages

Futures contracts are taxed at different rates than stocks, bonds, ETFs and mutual funds. In some cases, trading e-mini stock index futures may result in more favorable tax treatment than other trading instruments. Like other futures contracts, the e-mini stock index futures contracts (including ES, NQ, YM and TF) generally fall under Section 1256 of the U. S. tax code, and gains and losses are marked-to-market at the end of each tax year. Marked-to-market means that all realized and un-realized gains and losses are reported. Futures contracts fall under the 60/40 rule. where 60% of gains are treated as long-term capital gains and 40% are treated as short-term capital gains (ordinary income) - regardless of the actual length of the holding period. For active traders, this can result in tax savings. Currently, the maximum long-term capital gains tax rate is 15% and the maximum short-term capital gains tax rate is 35%. With the 60/40 rules, futures traders can achieve a net maximum blended tax rate of 23%. Depending on the tax payer's tax bracket, this figure can be lower. For example, assume a trader makes $50,000 in one year trading the ES. $30,000 will be taxed at the lower, long-term capital gains rate, and $20,000 will be taxed at the higher, short-term capital gains rate:

If, on the other hand, the $50,000 the trader made in one year was made trading stocks, the entire amount would be taxed at the higher, short-term capital gains tax rate:

$50,000 X 35% = $17,500

The difference between the short-term capital gains and the Section 1256 contracts (in this example, the ES) is $6,000, a substantial tax savings.

When trading stocks, by comparison, 100% of gains are taxed at the short-term gains tax rate if the positions are held for less than one year. The favorable tax treatment for futures traders is one reason why active traders enter the futures market rather than the stock market.

Another advantage with trading futures is the ease of year-end filing. At the end of each year, futures brokers send each futures client a 1099-B form. This tax form shows the net result of all trading - not each individual trade. This number is entered on the tax return (compared with stock trades where each individual trade must be entered). Even though most futures trading is exempt from detailed transaction reporting, it is prudent to keep well-maintained and accurate records of all trading activity in case of an audit.

Taxes are complicated and the rules change frequently. It is important to consult with a qualified tax attorney or accountant for up-to-date information and advice that is applicable to each trader's situation.

The Bottom Line

The e-minis are the small but mighty cousins of their larger, full-sized contracts. Popular among individual and institutional traders alike, the e-minis offer substantial volume and volatility, both of which help set the stage for profitable trading opportunities. Most futures brokers offer competitive pricing structures and robust trading platforms with which to perform market analysis and enter trades. The e-minis are traded using margin, giving traders the ability to enter positions they would otherwise be able to with cash account. In addition, since the e-minis are futures contracts, they are subject to favorable tax treatment.

Forex earnings and united states taxes

Forex earnings and united states taxesForex Earnings and United States Taxes

Tax levies on income from Forex trading differs from country to country, but with ‘Tax Day’ a recent memory in the United States, it’s important to address tax-related issues that may arise for Forex traders. Though this article attempts to address the multitude of issues that should be considered, I strongly advise anyone reading this article to consult with a tax advisor in order to ensure that their U. S. taxes are filed appropriately.

Section 1256

Currency traders involved in the Forex spot (cash) market with a U. S. brokerage firm, can choose to be taxed under the same tax rules as regular commodities [IRC (Internal Revenue Code) Section 1256 contracts] or under the special rules of IRC Section 988 (Treatment of Certain Foreign Currency Transactions).

Under Section 1256, US-based individual Forex traders have a considerable advantage over stock traders. Forex traders are allowed to split their capital gains on Schedule D using a 60%/40% split when reporting on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles.) This means that 60% of the capital gains are taxed at the lower, long-term capital gains rate and the remaining 40% at the ordinary or short-term capital gains rate, which depends on the tax bracket the trader falls under which can be as high as 35%. This results in an average rate of 23%, which is 12% less than the regular (short-term) rate.

Section 988

U. S. companies, however, who trade with a U. S. Forex broker and profit from the fluctuation in foreign exchange rates as part of their normal course of business, fall under Section 988. This means their gains and losses from foreign exchange, such as buying and selling of foreign goods, are treated as interest income or expense and get taxed accordingly. Consequently, they do not receive the beneficial 60/40 split.

Currency traders are also exposed to daily exchange rate fluctuations so technically their trading activity should also fall under the provisions of Section 988. But because these daily fluctuations can be considered part of a traders assets in the normal course of his business, the IRS gives the trader the option of rejecting or ‘opting out’ of Section 988 and choosing to have the gains taxed under the favorable 60/40 split of Section 1256.

What does it mean to opt out? Basically, when you opt out you dont have to file anything with the IRS. However you are required to keep an internal record in your own books about the fact that you are opting out of Section 988.

Many currency traders in the United States wait until after the year is over before filing in order to see if there have been any gains from their trading activities. If there are, they claim that they elected out of IRC 988 to enjoy the beneficial Section 1256 treatment. If, on the other hand, the sum of the trades from cash Forex is negative, they remain with the traditional Section 988. Under the current tax law, it is very difficult to disprove whether the trader made the election at the beginning or at the end of the year and the IRS has not yet begun to fully monitor this activity.

Forex income tax uk

Forex income tax ukWill I be taxed as a forex trader if its my only income?

As you're no doubt aware there are two broad options for being taxed on your forex profits. You could either be a forex trader or a forex investor.

The two are completely different in tax terms (its essentially the same difference as between a property investor who purchases property to rent or a property developer who purchases property to renovate and sell).

Forex traders are subject to income tax. Potentially at 40% and even 50% after April 2010 if they have profits over ?150K. Investors are subject to CGT and the 18% CGT rate. They'll also have the annual CGT exemption of around ?10K to offset. Traders have a wider expense/deduction offset are classed as self employed. This means if they had no other income they'd also need to account for national insurance (class 2 at around ?2.00 per week) and class 4 at 8% on profits above the primary threshold).

So essentially if you're a basic rate tax payer its the difference between 18% CGT and 28% income tax and NIC. If you're a higher rate taxpayer the rate difference is 40% v 18%. There's also the allowances/expenses etc to take into account.

For many, trader status would not be advantageous, at least not unless there were losses, so avoiding being taxed as a forex trader would be advisable.

Establishing when you are and aren't a forex trader is not straightforward though. In particular one of the questions we're frequently asked is whether if forex income is your only income this will make you a trader?

Just because it's you only 'income' would not automatically make it trading income. The whole nature of your activity would need to be assessed. The general rule with forex activities just as shares, derivatives and other financial assets is that you are an investor. There would need to be an organised trading operation before you'd be classed as a trader. In the case of an individual (ie not a company) this is more difficult to apply.

Given that under self assessment it is for you to self assess your own tax liability you should determine the status of your forex activity. In most cases completing the return on the basis of a forex investor would also be accepted by HMRC.

The fact that the forex income is your only income would not therefore mean anything by itself. You could for instance have no other income but earn generous profits from a minimal number of trades per week and essentially be 'lucky' with your investments.

By contrast you could have another occupation, trade frequently with sophisticated risk management and a commercial set up and have a better chance of being classed as a trader.

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How currency traders can reduce their taxes

How currency traders can reduce their taxesHow Currency Traders Can Reduce Their Taxes

The foreign exchange market, or forex, as it is more commonly called, is the biggest market in the world with over $4 trillion changing hands every single day. To put that into perspective, it is 12 times greater than the average daily turnover on the global equity markets and more than 50 times greater than the average daily turnover on the NYSE.

Trading in foreign currencies has been around for thousands of years. In fact, some of the first known currency traders were the Middle Eastern moneychangers who exchanged coins to facilitate trade. Given a market this size, it is no surprise that the taxation of forex remains a complexity to most traders and tax professionals.

A LITTLE BACKGROUND

The Tax Reform Act of 1986 instituted the provisions covering Section 988 transactions.

Section 988 transactions, the default method of taxation for currency traders, treats the gains or losses from forex transactions as ordinary gains or ordinary losses. If you have forex gains, they are taxed as ordinary income, subject to which ever tax bracket you fall under. Let's look at an example:

Joe Trader is married and makes $100,000 salary a year. He has a good year trading FOREX, making $50,000 for the year. Joe falls in the 25% tax bracket, making his tax due on his FOREX gain $12,500 ($50,000 X 25%).

BUT WHAT ABOUT FOREX LOSSES?

If you lose money trading FOREX, your losses are treated as ordinary losses, and can be used to offset any other income on your tax return. Let's use Joe as an example again:

Instead of making $50,000, Joe loses $50,000 trading forex. The $50,000 loss can be taken against his W-2 income, making his taxable income $50,000 ($100,000 - $50,000). If his forex loss were a capital loss instead of an ordinary loss, Joe would only be able to take $3,000 off of his taxes, making his taxable income $97,000. The remaining $47,000 loss would have to be carried forward and used up in future years.

So what type of FOREX trader benefits from Section 988 tax treatment? In my opinion, if a trader is not consistently profitable and has other earned income on their tax return, they should stay under the Section 988 taxation to be able to fully utilize any losses that come from FOREX trading. If you are not consistently profitable in your FOREX trading AND you have no other earned income, you should consider doing what profitable FOREX traders should do: opt out of Section 988 tax treatment. I'll explain why at the end of the article.

IRC section 988(a) (1) (B) provides FOREX traders with a way to opt out of the ordinary gain/loss tax treatment:

"Except as provided in regulations, a taxpayer may elect to treat any foreign currency gain or loss. as a capital gain or loss (as the case may be) if the taxpayer makes such election and identifies such transaction before the close of the day on which such transaction is entered into".

This exception gives forex traders the option to opt out of ordinary gain/loss treatment; making your forex trades taxed the same as section 1256 contracts. Section 1256 contracts are taxed at a more beneficial rate of 60/40, 60% taxed at long term capital gains rates and 40% taxed at short term capital gains rates. The maximum tax rate on ordinary income currently is 39.6%. The maximum tax rate on Section 1256 contracts by comparison is 28%, almost a 30% reduction in taxation on the gains!

Using our example above, if Joe had opted out of the Section 988 tax treatment, his tax rate on his $50,000 FOREX gain at a 60/40 rate would drop 24% (19% vs. 25%), saving him $3,000 in taxes that year!

Here is a comparison of ordinary tax rates vs. the 60/40 tax rate using 2013 tax brackets:

The IRS requires a trader to make the election to opt out of Section 988 tax treatment internally, meaning you make the opt out election in your own corporate books or records. You do not have to notify the IRS in advance, as you do if you were making the mark to market election. I'd personally suggest having your opt out election notarized, which would help solidify your claim of a timely election if you got audited.

THE BOTTOM LINE

Opting out of Section 988 tax treatment for forex traders is a no-brainer decision for profitable traders due to the tax savings. However, it also makes sense for traders who are not consistently profitable yet but also don't have any earned income on their tax returns. If a trader has an ordinary loss and no earned income to offset it against, the ordinary loss ends up being wasted as it cannot be carried forward to future tax years. If you opt out and elect Section 1256 tax treatment, the loss can be carried forward and used against future capital gains.

If you are still uncertain as to whether to opt out or not, please seek out the advice of a knowledgeable trader tax specialists to assist you with this decision.

Learn more about Ribble's firm here.

Europa universalis iv

Europa universalis ivTrade nodes and trading

2 years ago #1

So I'm not entirely sure about how this works. I know you have merchant units who you can send to different nodes to either push or collect. However, what are the requirements for being able to collect and push. Because in some cases I noticed it just does one or the other?

Also is it pointless to push trade from a node in which you have no power? If so, is there any way to get power there without building things or owning land?

dark lancer

2 years ago #2

This is something which I've felt has not been explained well enough.

Your merchant should collect from trade in the trade node your capital city is connected to. If you're France, it's Bordeaux. If you're Castile or Spain, it's Seville. If you're Japan or a Japanese Daimyo, it's Nippon.

Any other trade nodes should only have merchants transferring trade power. They will only attempt to move it towards your capital city's trade node. Trade can't be moved away from Antwerp or Venice, or your capital city.

Believe it or not, this next part came to me in a dream last night: the best deployment of your merchants is to have one collecting from your capital city's trade node; the rest of your merchants should form a path to each next trade node you have influence in. If you are France and you have trade influence in the Chesapeake Bay trade node, have a merchant transfer power in the Western Europe trade node and the Chesapeake Bay trade node.

Not changing this signature until 2/21/14.

How to file taxes as aforex trader

How to file taxes as aforex traderHow To File Taxes As A Forex Trader

By Jason Hoerr

Contributed by forexfraud

Most new traders never have concern themselves with finding out the specifics of taxes in relation to forex trading.

All of a new trader's focus is simply on learning to trade profitably!

However, at some point, traders must learn how to account for their trading activity and how to file taxes-hopefully filing taxes is to account for forex gains, but even if there are losses on the year, a trader should file them with the proper national governmental authority.

United States

Filing taxes on forex profits and losses can be a bit confusing for new traders.

In the United States there are a few options for Forex Trader .

First of all, the explosion of the retail forex market has caused the IRS to fall behind the curve in many ways, so the current rules that are in place concerning forex tax reporting could change any time.

Regulations are continually being instituted in the forex market, so always make sure you confer with a tax professional before taking any steps in filing your taxes.

There are essentially two sections defined by the IRS that apply to forex traders - section 988 and section 1256.

Section 1256 is the standard 60/40 capital gains tax treatment.

This is the most common way that forex traders file forex profits.

Under this tax treatment, 60% of total capital gains are taxed at 15% and the remaining 40% of total capital gains are taxed at your current income tax bracket, which could currently be as high as 35%.

Profitable traders prefer to report forex trading profits under section 1256 because it offers a greater tax break than section 988.

Losing trader tend to prefer section 988 because there is no capital-loss limitation, which allows for full standard loss treatment against any income.

This will help a trader take full advantage of trading losses in order to decrease taxable income.

In order to take advantage of section 1256, a trader must opt-out of section 988, but currently the IRS does not require a trader to file anything to report that he is opting out.

Also, if your forex account is huge and you lose more than $2 million in any single tax year, you may qualify to file a Form 886.

If your broker is based in the United States, you will receive a 1099 at the end of the year reporting your total gains/losses.

This number should be used to file taxes under either section 1256 or section 988.

Forex trading tax laws in the U. K. are much more trader-friendly than the United States.

Currently, spread betting profits are not taxed in the U. K. and many U. K. brokers offer retail forex demo and regular accounts in a spread betting structure.

This means a trader can trade the forex market and be free from paying taxes; thus, forex trading is tax-free!

This is incredibly positive for profitable forex traders in the U. K.

The drawback to spread betting is that a trader cannot claim trading losses against his other personal income.

Also, if a trader is managing funds or trading for an institution there are many other tax laws that one may have to abide by.

However, if a trader stays with spread betting, no taxes need to be paid on profits.

There are different pieces of legislation in process that could change forex tax laws very soon.

One should make sure that one confers with a tax professional to ensure he is abiding by all proper laws.

Other Options

Another option that carries a higher degree of risk is creating an offshore business that engages in forex trading in a country with little to no forex taxation; then, pay yourself a small salary to live on each year, which would be taxed in the country where you are a citizen.

There are many types of forex software that can help you learn to trade the forex market.

This type of business formation is very risky because you must make sure you are abiding 100% by tax laws and not slipping into illegal activities.

This type of operation should be carried out only with the help of a tax professional, and it may be best to confirm with at least 2 tax professionals to make sure you are making the right decisions.

Balikbayan cargo service-vogt&magno

Balikbayan cargo service-vogt&magnoPhilippine Geographical Map

Company's Mission

To cater to all your "Balikbayan" Cargo needs from Germany, France, Czech Republic, Netherlands, Luxembourg Austria to any location in the Philippines (except Batanes).

To deliver your "Balikbayan" boxes in a fastest possible way with a guarantee that your parcel will be in a good condition upon arrival at your consignee.

To be able to collect as many as possible goods and money (income from each box that was sent by the client) to help us fill the free “Balibayan” boxes that will be donated to the less fortunate and/or spend it for relief goods to be given to those who are affected by the calamities in the Philippines.

Company's Vision

To be the most reliable and accommodating "Balikbayan" Cargo Service in Germany, France, Czech Republic, Netherlands, Luxembourg Austria.

We envision a fruitful relationship with our clients that will continuously help us achieve our goal to provide a free Balikbayan boxes to the people whore in need and dese rving.

We visualized that on every successful shipments we made we will be able to gain the trust of our fellow “Kababayans”; thus, we will be able to cater to most of the countries in European Union.

We foresee that with the continuous patronage of our clients we will be able to stay longer in this industry. Hence, we will be able to provide a good quality of service our clients deserve.

Forex taxes

Forex taxesForex Taxes

This applies to U. S. traders only who are trading with a US brokerage firm. Foreign investors that are not residents or citizens of the United States of America do not have to pay any taxes on foreign exchange profits. We do not accept traders from the United States, so this section is just provided to give US traders an idea of the taxes they might need to pay if they trade in the United States.

Note: This Information is for Educational Purposes Only and Should Not be Construed as Tax or Investment Advice of any kind. Make Sure that you Consult with a Tax Professional about your Forex taxes.

More and more investors from all over the world are accessing the largest financial market in the world through their personal computers. As demand surges for foreign exchange (FX) trading, more and more U. S. traders have to deal with taxation issues at the end of the year.

Forex: Taxed as Futures or Cash?

Currency traders involved in the forex spot (cash) market with a US brokerage firm, can choose to be taxed under the same tax rules as regular commodities [IRC (Internal Revenue Code) Section 1256 contracts] or under the special rules of IRC Section 988 (Treatment of Certain Foreign Currency Transactions). IRC 988 applies to cash Forex unless the trader elects to opt out.

The Advantage of Section 1256 for Currency Traders

Under Section 1256, even US-based forex traders can have a significant advantage over stock traders. By reporting capital gains on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles), traders are allowed to split their capital gains on Schedule D using a 60% / 40% split. This means that 60% of the capital gains are taxed at the lower, long-term capital gains rate (currently 15%) and the remaining 40% at the ordinary or short-term capital gains rate, which depends on the tax bracket the trader falls under (as high as 35%). This results in an average rate of 23%, which is 12% less than the regular (short-term) rate.

If cash Forex is subject to the Section 988 rules, how can a trader elect the more beneficial Section 1256 split? Please read on to find out more.

To Opt Out or Not to Opt Out of Section 988

US companies who trade with a US FX broker and profit from the fluctuation in foreign exchange rates as part of their normal course of business, fall under Section 988. This means their gains and losses from foreign exchange (such as buying and selling of foreign goods) are treated as interest income or expense and get taxed accordingly. Consequently, they do not receive the beneficial 60/40 split.

Since FX traders are also exposed to daily exchange rate fluctuations, their trading activity falls under the provisions of Section 988 too but dont worry. The IRS wants to be nice to you (so far). Because these daily fluctuations can be considered part of a traders assets in the normal course of his business, the IRS gives the trader the option of rejecting (opting out) of Section 988 and electing that the gains be taxed under the favorable 60/40 split of Section 1256.

What do you have to do to opt out of Section 988? Even though you dont have to file anything with the IRS to opt out, you are required to do so internally before starting to trade; i. e. you must keep records in your own books about the fact that you are opting out of Section 988.

Many currency traders in the United States bend the rules by waiting after the year is over to see if they have any gains from their trading activities. If they do, they claim that they elected out of IRC 988 to enjoy the beneficial Section 1256 treatment. On the other hand, if the sum of the trades from cash Forex is not positive, they stick with the traditional Section 988. Since (under the current tax law) it becomes very difficult to disprove whether the trader made the election at the beginning or at the end of the year, IRS has not yet begun to crack down on this activity.

What does a Trader do When Tax Time Comes?

FX traders in the United States who trade with US-based NFA-member FCMs or RFEDs should receive 1099 forms from their broker at the end of the year like stock and futures traders do. No matter in what country your broker is based or what tax-related reports they provide, you could pull up reports online from your accounts and seek the help of a tax professional. No matter what you decide to do, dont fall into the temptation of lumping your trades with your section 1256 activity (if any). Forex transactions need to be separated into Section 988 reporting.

Given the fact that the forex market is one of the fastest-growing financial markets around, it might eventually come under closer IRS regulation. In the meantime, traders continue to enjoy tax advantages by trading foreign currencies.

What Taxes do I have to pay if I trade with a Non-US Forex Broker?

The above information on the tax implications of trading forex only applies to US-based currency traders who have their accounts at a US brokerage firm thats a member of the NFA and registered with the CFTC. We do not accept clients who are residents of Cuba, Nigeria, USA, Lebanon, North Korea, Iran, Iraq, and Afghanistan.

Trading strategy for margin

Trading strategy for marginDay Trading FAQs

FINRA and the NYSE define a Pattern Day Trader (PDT) as one who effects four or more day trades (same day opening and closing of a given equity security ("stock") or equity option) within a five business day period.

A potential pattern day trader error message means that an account has less than the SEC required $25,000 minimum Net Liquidation Value AND the number of available day trades (3) has already been used within the last five days.

If an account receives the error message “potential pattern day trader”, there is no PDT flag to remove. The account holder will need to wait for the five-day period to end before any new positions can be initiated in the account.

A vertical credit option spread is constructed by buying one option and selling another option of the same type (call or put) in the same expiration month, where the option sold is more expensive than the option bought, resulting in a net credit to your trading account. With a credit spread there is a margin requirement based on the difference in the strike prices times the number of contracts ordered.

I started selling credit spreads because I discovered that I could consistently and safely generate a monthly return and cash flow. The key was choosing Put and Call options that were very FOTM ( F ar O ut of T he M oney) and safe. I trade options that I expect to be worthless at expiration. My strategy is very boring and good for those desiring a steady 3% monthly return with minimal risk. I only process one Iron Condor trade a month and normally start with Bull Put or Bear Call Credit Spreads. When I can I will complete an Iron Condor to double the return.

An option has intrinsic value + time value. All my trades are far out of the money options so there is no intrinsic value, only time value. When I sell an out of the money option, and the option expires worthless, I only sold time. The term for the depreciation of a stock option as it gets closer to expiration is called time decay. I only trade credit spreads on the SPX, NDX and RUT broad based stock indexes and the SPY, QQQQ, DIA and IWM ETF indexes. I don't get involved with individual stocks for two reasons:

1. Too much research required to pick a stock.

2. Risk - using a single stock opens yourself to big volatility risk from news event. Individual stocks can often make a 10 - 20% move in a day whereas the the broad based stock indexes remain stable.

My Trading Strategy and Goals

1) Earn consistent cash profits month after month averaging a minimum 3% (2%-5%) net monthly return. This is a 36% annualized return. Earn these profits in bull and bear markets.

2) 45-30 days away from the next expiration date enter one, or both sides, of an Iron Condor trade (Bull Put and Bear Call). These trades must have a very high probability of expiring worthless.

3) Prior to the expiration date I want to complete an Iron Condor trade by entering the other side (Bull Put or Bear Call). This doubles the return on the required margin capital that only covers one side of the Iron Condor.

Following are some additional important benefits of this option trading strategy:

Trading Capital

With this strategy your trading capital is only used to support margin requirements. Most option brokers allow you to invest this capital elsewhere to be used as collateral for spread trading. These brokers do not require margin to be in cash so you can actually earn more than just the spread premiums. Trading capital can be invested in closed-end funds that pay dividends monthly and are diversified across, preferreds, REITs, corporate bonds, floating rate loans, convertible bonds and other fixed instruments. Between the dividend yield and capital appreciation you can earn 7%-10% annually. Most brokers allow you to margin 100% of cash amounts, 90-95% of t-bill amounts and 50% of the stock accounts like closed-end funds. You can also trade credit spreads in an IRA account as long as the account balance is cash.

Capital Gains Taxes on Stock Option Index Trades (SPX, NDX and RUT Index trades only)

Short-term gains from most types of stock and option investing are taxed at the same rate as ordinary income. Long-term gains on stock and option investments held for more than 12 months are considered long-term and taxed at 15% in most cases. If your tax bracket is below 25% then long term gains are taxed only 5%.

The good news is that the gains from the stock index options trades we are trading are taxed differently than gains on individual stock options and stocks. Gains on our stock index spread trades are considered ITC Section 1256 contracts. This means any gains made in these trades are taxed under a 60/40 rule. This rule states that gains are treated as 60% long-term capital gain income and 40% short-term capital gain income (ordinary income) regardless of how long the investment was held. So when we hold a index spread trade for 30 days (our average holding period), 60% of the profit made from that trade is treated as long-term capital gain income and taxed at 15% or 5%. Please do not take this information as tax advice. Do your own research with a tax advisor like HR Block.

Index Spread Options Trading © 2006 | All Rights Reserved

The super basics of forex trading and taxes

The super basics of forex trading and taxesThe Super Basics of Forex Trading and Taxes

Posted 5 years ago | 12:00 PM | 13 March 2011 6 Comments

Before I begin, I gotta throw out the necessary disclaimers. First, I am not a tax professional, just a fellow citizen of the FX world trying to help my fellow FX fanatics understand one of the most confusing aspects of the Forex trading business: taxes! Therefore, I am not making any recommendations on how anyone should handle their taxes. This is for informational purposes ONLY, and hopefully when you DO consult a tax professional, this article will help you ask the right questions. Secondly, the following points I am about to discuss are for U. S. traders who trade with U. S. brokerage firms ONLY. Taxes differ per country, so it would be best to consult a local tax professional in your own region.

In the U. S. many Forex brokers do not handle your taxes. This means that its up to you to compute your gains and losses, and file your dues or deductions with the appropriate tax authorities. I know its difficult, so I decided to put together a mini-primer on how Forex trading taxes work as I understand it.

As a budding Forex trader in the U. S.. you have to be aware of two sections of the tax code: Section 988 and Section 1256 . Both of these sections were initially made for forward contracts, but over time, they have also carried over to apply to spot Forex transactions.

As retail Forex traders, by default, we fall under the tax provisions of IRC Section 988. This has its perks and its drawbacks.

Section 988 states that an individual (or a monster, in the case of Cyclopip ) has the ability to claim capital losses as an income tax deduction. Before we get into the nitty-gritty of it all, lets add a few nerdy terms into our vocabulary. According to Pipcrawler. it helps to impress the ladies!

By definition, a capital loss is when you sell an asset for less than what it cost you, such as in the case of a losing trade. Capital gains, on the other hand, occur when you sell an asset for more than its cost. Now, deduct your total capital losses from your capital gains and you have your NET capital gain or NET capital loss, depending on whether you ended up positive or not.

The beauty of Section 988 is that in the event your capital losses exceed your capital gains (as in the case of a net capital loss), you can claim the excess as a deduction from your other sources of income. In other words, if you had posted capital losses of $12,000 and a capital gain of $10,000, you would still be able to claim excess loss of $2,000 as a tax deduction. Its a pretty handy feature if your trading is in the dumps!

However, the law does allow you to opt out of Section 988 to be taxed under the provisions of Section 1256 if you think thats more favorable.

Under Section 1256, you are allowed to file your Forex capital gains under the 60/40 rule.

What the heck does this mean.

The 60/40 rule basically means that you can tax 60% of your capital gains under the long-term capital gains rate (LTCG) and 40% under the short-term capital gains (STCG) rate. Take note that the LTCG rate (normally around 15%) is significantly lower than STCG (usually around 35%). By paying a proportion of your taxes under the lower tax rate, you can effectively lower the total amount of tax paid on your capital gains.

Let me clarify this with an example.

Lets say that you have a $10,000 trading account and in past year, you made $1,000. Assuming that the STCG is at 40%, this means that you would have to pay $400 in taxes, and your take home net profit would be $600.

Now, lets say that you elect to tax your gains under the Section 1256 provision and that the LTCG rate is 10%. This means that 60% of your $1,000 gain would be taxed at 10%, while the remaining 40% would be taxed at 40%.

Your total taxes paid on the capital gains would then be equal to:

[$1,000 x .60 x .10] + [$1,000 x .40 x .40] = $60 + $160 = $220.

This leaves you with a take home net profit would be equal to $780.

By electing to be taxed under Section 1256, you have basically cut your tax rate almost in half (from 40% to 22%). Pretty sweet eh?

The downside of Section 1256 is the amount of capital losses youre allowed to claim is limited to the amount of capital gains you recorded. Put simply, if you recorded capital gains of $10,000 and capital losses of $12,000, you can only claim up to a maximum $10,000 of your capital losses as a deduction this year. The remaining $2,000 will have to wait to be deducted from capital gains in future years.

Alright, I know its confusing, so heres the tl;dr (too long; didnt read) version:

When your Forex trading acitivity ends up with net loss, youre better off with Section 988. It enables you to deduct your net capital loss from other types of income. On the other hand, if your trading activity results with a net profit, Section 1256 is preferred because it allows you to have a lower overall capital gains tax rate.

So, selecting which Section to elect should be a bit easier to do now, but of course theres a little more to your taxes than that. And with rules and regulations constantly changing, the best thing to do to avoid accounting mistake and end up with huge finesor the IRS at your dooris to go consult a tax professional or an accountantdo it now!