Forex, short for foreign exchange, is the largest financial market in the world, with an average daily trading volume of $5.1 trillion. Forex trading involves buying and selling currencies with the aim of making a profit. As with any other type of investment, profits earned from forex trading are subject to taxes. In this article, we will discuss how forex is taxed and how to use a forex taxed calculator in 2019.
Forex trading taxes in the United States
Forex trading is taxed differently in different countries. In the United States, forex trading profits are treated as capital gains and are subject to taxation. The tax rate for capital gains depends on the holding period. If you hold the asset for less than a year before selling it, the profit is considered short-term capital gains and is taxed at the ordinary income tax rate, which currently ranges from 10% to 37%. If you hold the asset for more than a year before selling it, the profit is considered long-term capital gains and is taxed at a lower rate, which ranges from 0% to 20%, depending on your income.
On the other hand, if you incur a loss from forex trading, you can deduct it from your capital gains to reduce your tax liability. If your capital losses exceed your capital gains, you can use the excess loss to offset up to $3,000 of ordinary income. If you still have losses after offsetting your capital gains and ordinary income, you can carry the remaining losses forward to future years.
Forex trading taxes in other countries
The tax treatment of forex trading profits varies from country to country. In some countries, forex trading is considered as gambling and is taxed at a higher rate. In other countries, forex trading profits are subject to capital gains tax, but the tax rate may be different from the ordinary income tax rate.
For example, in the United Kingdom, forex trading profits are subject to capital gains tax, but the tax rate is only 10% for basic rate taxpayers and 20% for higher rate taxpayers, compared to the ordinary income tax rate of up to 45%. In Australia, forex trading profits are subject to capital gains tax at the same rate as the taxpayer’s ordinary income tax rate, but the taxpayer can claim a 50% discount on the capital gain if the asset is held for more than a year.
Using a forex taxed calculator
Calculating your forex trading taxes can be complex, especially if you have multiple trades and hold the assets for different periods. Fortunately, there are online forex taxed calculators that can help you calculate your tax liability quickly and accurately.
To use a forex taxed calculator, you need to input the following information:
– The currency pair traded
– The date of the trade
– The number of units traded
– The purchase price and sale price of the currency pair
– The holding period of the asset
Once you have inputted this information, the forex taxed calculator will calculate your taxable profit or loss, as well as your tax liability. The calculator may also provide you with a summary of your trades and a breakdown of your tax liability by type of capital gains.
Conclusion
Forex trading profits are subject to taxation in most countries, including the United States. The tax rate for forex trading profits depends on the holding period and the taxpayer’s income. Forex trading losses can be deducted from capital gains and ordinary income to reduce the tax liability. Using a forex taxed calculator can help you calculate your tax liability quickly and accurately. It is important to consult a tax professional if you have any questions or concerns about forex trading taxes.
