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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7219
Experience:  15years with H & R Block. Divisional leader, Instructor
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I am an indian citizen who is Green Card Holder U.S. Resident

Resolved Question:

I am an indian citizen who is Green Card Holder U.S. Resident and i do only FOREX Trading online on the FXCM Platform (New York based broker company) as an individual for myself for my livelihood . I have only $5000 as my capital deposited in my Forex Trading Account with FXCM and i do online Sell - Purchase transactions of currency pairs only with this capital . Whenever my capital exceeds by atleast $50 of earning , i keep on withdrawing the earning part above my capital investment of $5000 .

Please advise about my Federal , State or any other Tax obligations to fulfill .

FYI : My broker company - FXCM does not provide any form for tax filing. I can only take print out of annual statement of my account online which has a thousand of tiny-tiny amount sell - buy transactions over a year.
Submitted: 2 years ago.
Category: Tax
Expert:  Robin D. replied 2 years ago.

Robin D :

Hello and thank you for using Just Answer.
You will be filing a Schedule D every year that shows your sales for that tax year. It will be very important for you to keep good records of your costs and sales price. Be carefull about selling and buying the same stocks within 60 days. This is known as a wash sale and you can cannot imediatly recognize or use losses on wash sales.
You can on the Schedule D just enter your botXXXXX XXXXXne on the total and then attach a copy of your printout but as I said make certain that you account for any wash sales you may have had.

Customer:

I dont do stock trading at all , i do only currency trading / forex trading (selling & buying currency pairs like EURO/USD , USD/GBP , etc. etc.) and in forex trading we do buying and selling the currencies in the same day to book profit most of the time .

Robin D :

Your gains and losses are considered as interest income and expenses. This falls under IRC 988 but you can opt to have your gains taxed as Capital gain which would be an advantage to you.

Robin D :

This area can be very complicated and more involved then you should rely on in a chat. I suggest you have your return prepared by a professional that is fasmiliar with foreign currency exchange as you will have a possible daily rate to deal with.

Customer:

and what about the transactions on which is capital looses and not capital gains

Robin D :

Then those would be ordinary if you choose to have the losses shown as 1256 instead of 988 you would show on Schedule D using the 60/40 split but still be limited by gains and then carryforward at $3000 loss limit each year till used.

Robin D :

I suggest you read the following
http://www.greencompany.com/EducationCenter/GTTRecCurrency.shtml
I cannot add more to the converstaion, this is all still up to IRS interpretation of thetrading.

Customer:

what is form 8949 i heard to report capital gains

Robin D :

The Form 8949 is a new form that will list all the transactions. Starting with 2011, Schedule D now functions as a summary of all capital gains transactions. Individual investment sales are to be detailed on the new Form 8949.

Robin D :

Thank you in advance for clicking ACCEPT

Robin D :

.

Customer:
but there are my more than thousand transactions of tiny -tiny amount over a year of 2011 which are so many in number of transactions to manually input in the Form 8949 . Can i attach the annual statement print-outs (taken from my trading account on my broker company website) with the return ? and then how can i e-file my return ?
Robin D :

Yes, I said in the beginning that you can do that. You will still need to use the 8949 but you can list the total and then attach a statement. E-filing would need to be addressed when the e-file program opens for the IRS. I do not know how they are going to handle that yet. YOu may need to mail if you want to use a statement and not enter the transactions. Whatever program you use to file will advise if you can e-file.

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7219
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 6 other Tax Specialists are ready to help you

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