Forex gains and losses? (2024)

A quick question.

I trade spot forex through forex.com. I have some losses and I would like to to know how do I file these losses on turbo tax. I printed out my trading transaction history for during 2014, and on the transaction, it reported a loss for the year. I spoke to a cpa through turbo tax and he said that they wouldn't question if I filed my gains or losses through Box B(short term), under Scheduled D.

Here is my questions.

#1-I would like to clarify if its proper for me to continue to file these gains/losses under schedule D since I was never sent a 1099-b form, rather a printout from the forex.com website?

#2- is trading spot currency through forex.com, or fxcm considered a foreign currency futures "contract" ?

#3-I've read over time that i should enter gains or losses under section 988. Am I still entitled to utilize capital loss carry over?

I just like to officially know how to file it properly on turbo tax.

Any help is much appreciated.

• TurboTax Premier Windows

‎May 31, 20194:51 PM

By default, retail FOREX traders fall under Section 988, which covers short-term foreign exchange contracts like spot FOREX trades. Section 988 taxes FOREX gains and losses like ordinary income, which is at a higher rate than the capital gains tax for most earners. An advantage of Section 988 treatment is that any amount of ordinary income can be deducted as a loss, where only $3,000 in capital gains losses can be deducted. Section 988 gains or losses are reported on Form 6781.

Report the gains/losses in this way:

Federal taxes - Wages & income - I'll choose what I work on - Less common income - Misc income 1099-A 1099-C - Other reportable income

I've included a link to the Internal Revenue Code for your reference:

http://www.law.cornell.edu/uscode/text/26/988

Answers are correct to the best of my ability but do not constitute legal or tax advice.
**If this post is helpful please click on "thumbs up"**

To reportforex tradingunder Section 988, then you can import the data from your broker directly with a program such as GainsKeeper. orenter the information manually intoTurboTaxas Miscellaneous Income:

• Click Federal Taxes -> Wages & Income and scroll down to Less Common Income
• Go to the last selection, Miscellaneous Income and click Start
• Go to the last option, Other reportable income and click Start
• When it asks, "Any other reportable income?" say yes and then type in a description and the amount to report it on your tax return.

Be sure to indicate in the description that this is a total of your Forex trades and enter an amount for either a gain or a loss. If you lost money, report it with a negative number. For an example if you lost $12,000, enter this as -$12,000. Be sure to keep your documentation regarding the forex trades if the IRS requestsproof.

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By default, retail FOREX traders fall under Section 988, which covers short-term foreign exchange contracts like spot FOREX trades. Section 988 taxes FOREX gains and losses like ordinary income, which is at a higher rate than the capital gains tax for most earners. An advantage of Section 988 treatment is that any amount of ordinary income can be deducted as a loss, where only $3,000 in capital gains losses can be deducted. Section 988 gains or losses are reported on Form 6781.

Report the gains/losses in this way:

Federal taxes - Wages & income - I'll choose what I work on - Less common income - Misc income 1099-A 1099-C - Other reportable income

I've included a link to the Internal Revenue Code for your reference:

http://www.law.cornell.edu/uscode/text/26/988

Answers are correct to the best of my ability but do not constitute legal or tax advice.
**If this post is helpful please click on "thumbs up"**

Most helpful article I found on whre to enter for 1256: <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/2315617-i-have-a-2013-forex-loss-of-10-000-last-year-i-used-a-1256...>

To reportforex tradingunder Section 988, then you can import the data from your broker directly with a program such as GainsKeeper. orenter the information manually intoTurboTaxas Miscellaneous Income:

• Click Federal Taxes -> Wages & Income and scroll down to Less Common Income
• Go to the last selection, Miscellaneous Income and click Start
• Go to the last option, Other reportable income and click Start
• When it asks, "Any other reportable income?" say yes and then type in a description and the amount to report it on your tax return.

Be sure to indicate in the description that this is a total of your Forex trades and enter an amount for either a gain or a loss. If you lost money, report it with a negative number. For an example if you lost $12,000, enter this as -$12,000. Be sure to keep your documentation regarding the forex trades if the IRS requestsproof.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

If I also have future contract losses can I claim them in this section with forex?

Thank you.

Hi

For reporting retail forex trading(spot) LOSS/GAIN . Are you saying I have a choice either use sec988 or form 6781 ?

thanks for your assistance.

Huy

Let me clear up some misconceptions as Iread these various posts. Section 988 trading gains or losses areordinary gains and losses and is not treated like investment income thus is not reported on a schedule D. As a result, there are no carryovers to offset future income.

Please read thislinkposted by Turbo Tax Expert DaveF1006 for details how to report the income. Iknow it is already listed above butIthought i would post it here also. it is very important to note that this is ordinary and not investment income.

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Greeting:

I understand the forex reporting as ordinary income in MISC INCOME section. From this message board someone said to also fill out the form 6781 which is CONTRACT & STRADDLES . So I am confuse because I dont deal with trading futures contract?

thanks for your help.