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What kind of tax income is FX?

  • Post #1
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  • First Post: Feb 4, 2010 11:46pm Feb 4, 2010 11:46pm
HI guys

I would like to hear if someone can help me out (roughly) with the following... (Knowing that it may be different form country to country, but still what is it for you?)

I would like to know, for tax reasons (different incomes get taxed in a different way) what does FX profits fall under...

What I mean is, is it:

Derivatives?
Capital gains?
Interests?
Something else?

Any help (and in site) would be appreciated!!

Thanks allot.
Live happens 5 minutes at a time...
Capital gains in the US, but its taxed a bit different the your usual stock trader. As far as that I know the best option for anyone is to get the forms from your broker and go to well known and trusted tax service, not one with a temporary sign saying tax returns.
The answer to your question is complicated as are you an investor or trader? If you have profits, then you need a CPA that specializes in traders like http://www.greencompany.com/Educatio...Currency.shtml I don't work for them, just giving you some information.
Like I thought it is quite complicated... taxes usually are.
I was wondering if there is maybe someone from the UK that can also shed some light on this, since our tax system is much like there's.

PP2, i am definitely a day trader. In and out of positions few times a day. I presume an investor would be someone having more of a long term view - say few months and years. Plus what would be the difference between the two when it comes to taxes. i presume the Day trader will be paying more taxes.

Kind regards
PH
Live happens 5 minutes at a time...
Quoting Purple_Heart
Like I thought it is quite complicated... taxes usually are.
I was wondering if there is maybe someone from the UK that can also shed some light on this, since our tax system is much like there's.

PP2, i am definitely a day trader. In and out of positions few times a day. I presume an investor would be someone having more of a long term view - say few months and years. Plus what would be the difference between the two when it comes to taxes. i presume the Day trader will be paying more taxes.

Kind regards
PH
Are you spread-betting? If yes then all TAX FREE.
As I sit down to do my taxes right now, it is not true that day traders pay more. If you are in the UK, then this doesn't apply. But how you structure yourself, like I have a partnership and can prove I trade as a business (just saying you are a trader in the US doesn't work for tax purposes), I will pay less as I can deduct more. Read the website I posted for more information.
In the UK it's capital gains tax, unless you go though something like a spread betting company in which case it's tax free and doesn't need declared.
  • Post #8
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  • Last Post: Feb 7, 2010 10:18am Feb 7, 2010 10:18am
Quoting Davidee
In the UK it's capital gains tax, unless you go though something like a spread betting company in which case it's tax free and doesn't need declared.
I was told by HMRC that capital gains tax is payable only by companies that buy and sell currencies, eg for wages abroad, buying commodities etc because they have to do it, and can either gain on that or lose on it and in which case the tax payable or relief is taxed that way.

However, if someone is trading forex for a living, that is a different category and is treated as income tax, and payable that way.

Also spread betting can be tax free BUT if it is your only (or main) source of income, then it can still be classed as income tax.
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