Do you have to file taxes on capital gains when trading Foreign Currencies(FOREX)? -

If so how? Do you need to pay taxes annualy based on gains and losses according to your account balance, or do you only pay taxes on gains when you withdraw the money from the account? You do not pay according to either your account balance or when you withdraw money from the bank. You will pay according to the gain or loss on your transactions. You can choose to have your gains and losses treated as ordinary gains and losses (IRC Section 988). This is the default treatment. Alternately, you can choose to have your transactions treated as commodity exchanges (IRC Section 1256). This results in a 60-40 split in gains between long-term and short-term capital gains treatment. The Section 1256 treatment is more beneficial for gains. If you choose the commodity option, you figure your gains and losses using Form 6781 which is then transferred to Schedule D. See the source for a beginning reference regarding this topic. Yes. Taxable like gains on any other investment. See Schedule D. Form 1040. Yes, you have to report gains and losses on Schedule D in form 1040.