Taxes as an American?
Okay so ive looked online and researched and found a marriot of ways to file.
First heres my situation
Im funded with some firms but after paying taxes i realized im getting 85% back from my firms of which 24-30% is being taxed from 1099 withdrawals which means for most of my first after IRS gets their share im making 50-60%?!
That literally crushed me so i decided to start trading with my own capital and after saving 10k aside solely for trading i looked into taxes with non regulated brokers only to find out… they don’t provide 1099’s.. makes sense i guess but now how do I pay?
Ive found 1. 60/40 https://www.investopedia.com/articles/forex/09/forex-taxation-basics.asp Essentially i can fill out the 1256 contract to be labeled as “forex options” and or “futures” where 60% of my net gains are taxed as long term trades and 40% are short term.
Imo that sucks
Theres also the 988
Spot forex traders are considered "988 traders" and can deduct all of their losses for the year.
The issue for me is that all brokers dont give a nice printout like the prop firms do, instead they all just tell u to printout mt4 summaries.
Now maybe the average guy might actually do that if they take <1k trades a year? But i have an automated trading style that could literally do 1k a week..
So i decided maybe option 2? Crypto
- Deposit money into coinbase, then deposit that into the brokerage and withdrawal that also as crypto to my separate business bank acc and pay the 1099-b with crypto?
But with that it raises the biggest issue with the irs
“What the fuck are u doing over there”
It looks illegal and im pretty sure ill get a notice in the mail eventually.
So i wanna ask all of you, how the hell are you filing taxes and why on gods earth is this not talked about more?!
EDIT 1: Thank you for the responses
Ive found my answer; https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/how-do-i-report-section-988-forex-trading-losses/00/32959
This online line supports 988 but it also tells me EXACTLY how to file and also covers ways to file losses. Cheers; hopes this helps anyone who was confused as i was ☺️
EDIT 2: The turbo tax community are on it! https://ttlc.intuit.com/community/taxes/discussion/forex-tax-calculation-if-you-are-with-a-broker-that-doesnt-provide-1099-b-then-how-do-we-report/00/752244