Do you pay TAX after trading if you live in Nevada USA?

Hello everyone,

Is any trader here living in Nevada USA? Do you have to pay tax after trading profits?

Herringtrader

This should help you regarding the Federal taxes. I thought Nevada did not have a state income tax. Is that not correct?

http://www.greencompany.com/Educatio...Currency.shtml

http://www.taxadmin.org/fta/rate/ind_inc.html

I used to live in Nevada and there was no state tax at the time. Just checked their tax site and found this:

Nevada Department of Taxation
January 26, 2009


No Nevada Income Tax


The Nevada Department of Taxation receives an enormous number of inquiries regarding issues relating to
Federal Income tax. The State of Nevada does not participate in the administration of Federal Income Tax nor
does it levy a State personal, business or corporate income tax. The Nevada Department of Taxation does not
require informational copies of Nevada residents’ Federal Income Tax forms. Federal Income Tax inquiries
should be directed to the official IRS website at www.irs.gov.

Of course Uncle Sam still collects in Nevada.

In most cases forex trading just counts as income. If you take mark-to-market treatment it counts as capital gains, and is given a blended rate on your income tax return. If your state and county both have no income tax, then you won't pay at the state level.

Naturally you'll still pay at the federal level, tho.

I took 1256 treatment for '08. Was not difficult, didn't pay all that much either. Just pay attention to your deductions, exemptions and credits.

April 15 is gone now, but what are the process to take the 1256 Mark-to-market with the IRS, easy to do by yourself or do you need a tax preparer to do it for you?

Nah, just fill out your taxes and use the 1256 method.

You may want to print up a piece of paper that says "On xx/yy/2009 I hereby elect to use section 1256. Signed, _________" or something like that for your records, and if you're doubly worried about it get it notarized, but that's about it.

The thing about the IRS, you basically send in your returns and they just trust you... unless they audit you, then they can go way back and look at your records. So make sure you keep your records, more or less, forever. So the only time it'd come up is if they audit you and question that in an audit, and the only reason they'd do that is if they thought you weren't consistent over the years. Once you opt for 1256 I don't think you can go back, and section 988 may be more appropriate if you have a loss rather than a gain, so be sure it's a good idea before proceeding.

From there just start with schedule D and get a copy of form 6781. Fill out form 6781. For 6781 I put the names of my brokerage accounts on the lines, and then went into the broker history and printed up a history report for both. On 6781 next to the relevant line I put "See attachment." Finish up 6781, then go back to schedule D. Keep copies of those printouts for your records, too.

On schedule D put any non-1256 capital gains/losses in the first block of each section, if none, then 0. Total that up, and towards the bottom of each section that's where you put your 6781 information. On 6781 you should have gotten the long-term/short-term breakdown. If you have any loss carryovers they go here as well.

By the time schedule D is filled out you should have all of your capital gains/losses calculated, minus any relevant carry-overs, and properly categorized as long term and short term. Add the 2 on the final page and carry that to form 1040 (line 13). Assuming a standard 1040, that's where the blended rate now comes in. Finish the 1040 the rest of the way, stop when you get to figuring out your tax (stop after line 43).

The i1040 booklet explains the "figuring your taxes" part of things. Part of that will be filling out the "Qualified Dividends and Capital Gains Worksheet." That's where the blended rate is worked out. Short term gains is taxed at your applicable tax bracket, long term is taxed at the long term rate. By the time you're done with that, and any other relevant worksheets, you'll have line 44 figured out. From there you can work the rest of the way thru the form.

What's interesting about this is you'll notice that the calculations don't occur until after you've figured up all of your income and applied any deductions, but happens before you calculate your credits. That can have some interesting effects if you take the time to study it. But basically it encourages ppl w/ long term capital gains to take credits more than your average wage earner.

Rabid,
Thanks so much for taken out time to explain all these.

Thanks for the help! Let me rephrase my question! Would a European Forex trader pay less tax if he established a company in Nevada and traded through that company? Check out this site and tell your opinion!


http://www.nevadaincorporateusa.com/

i am copy and pasting this to my records. Tahnks rabid!