How to properly file taxes for a Forex trading loss in 2025
So I got into Forex trading last year thinking I'd make some extra cash but it hasn't gone so well. I ended up with a $135 loss for the year after trying various currency pairs. I know Forex can be treated as ordinary income for tax purposes, but I'm confused about how exactly to report this loss on my tax return. Which forms do I need to use? Do I need to list every single trade or just the overall loss amount? This is my first time dealing with any investment losses on taxes, and I want to make sure I'm doing it correctly so I don't get into trouble with the IRS. Any help would be really appreciated!
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Mia Rodriguez
Forex trading losses can be a bit tricky but definitely manageable on your tax return. Your currency trading can be reported in two different ways, and how you report depends on your trading frequency and approach. If you're trading Forex as a casual investor, you'll report your $135 loss on Schedule D and Form 8949 as a capital loss. You'll need to list each trade with dates, amounts, and proceeds. If you made a lot of trades, you can summarize them as long as you keep detailed records. Alternatively, if you're trading more actively or using Section 988 treatment, you can report it as ordinary income/loss on Schedule 1. This might be better for your situation since it's a small loss and can offset other ordinary income without capital loss limitations.
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Jacob Lewis
•This is helpful info but I'm still confused. How do I know if I should go with Schedule D or Section 988? I only made like 10 trades all year. Also, does my broker send me some kind of form that shows all this or do I have to track it myself?
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Mia Rodriguez
•The choice between Schedule D and Section 988 depends on your trading pattern. With only 10 trades, you're likely considered a casual investor, so Schedule D would be standard. However, Section 988 might be more beneficial for your loss situation as it allows for more straightforward deduction against ordinary income. Your broker should provide a year-end statement with your trading activity, but they might not send an official tax form like a 1099 unless you had significant trading volume or realized gains. It's your responsibility to track and report all trades regardless. I recommend keeping your own detailed records of all trades including dates, currency pairs, amounts, and exchange rates.
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Amelia Martinez
I had a similar situation last year with forex trading. After getting frustrated with tracking everything manually, I started using https://taxr.ai to organize all my forex trades. It automatically categorizes your trades and tells you whether to use Schedule D or Section 988 based on your specific situation. It saved me hours of trying to figure out which IRS forms to use and how to properly report everything.
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Ethan Clark
•Does it actually work for small-time traders? I only have a few trades but my broker's tax documents are super confusing. Can it handle different brokers or only the main ones?
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Mila Walker
•I'm skeptical about these tax tools. How does it actually determine which tax treatment is better for your situation? Does it actually save you money or just tell you what forms to fill out?
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Amelia Martinez
•It definitely works for small-time traders - that's actually where I think it provides the most value since it simplifies the whole process. The tool analyzed my 15 trades and showed me I'd save more using Section 988 treatment for my particular situation. The platform works with pretty much any broker since you can either connect your account directly or upload your statements manually. It will extract all the trade data and organize it properly for tax purposes, whether you have 5 trades or 500.
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Mila Walker
I wanted to follow up about my experience with taxr.ai after being skeptical. I finally tried it with my forex trading data from last year, and it was actually really helpful. It identified that I should use Section 988 for my $200 loss instead of capital loss treatment, which I wouldn't have known myself. The system pulled all my trades from my statements and organized them for tax reporting. Just finished my taxes yesterday and it made the forex part way easier than I expected!
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Logan Scott
If you're still struggling with your forex taxes or have questions about your filing status, I highly recommend using https://claimyr.com to speak directly with an IRS agent. I was in the same boat last year with confusion about forex reporting and couldn't get through on the IRS phone lines (kept getting disconnected after waiting 2+ hours). Claimyr got me connected to an IRS representative in under 25 minutes who explained exactly how to report my forex losses. Check out their demo at https://youtu.be/_kiP6q8DX5c to see how it works.
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Chloe Green
•Wait, how does this actually work? I thought it was impossible to get through to the IRS directly. Does this service just keep dialing for you or something?
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Lucas Adams
•Sounds like BS to me. The IRS barely answers their own phones and when they do, the agents often give conflicting info. How would this service magically get you better access than calling directly? Seems like a waste of money.
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Logan Scott
•It works by using an advanced system that navigates the IRS phone tree and holds your place in line, then calls you when an agent is actually about to answer. So instead of you waiting on hold for hours, their system does the waiting for you. The IRS agents I spoke with were actually quite helpful once I got through to them. The problem isn't that they don't know the answers, it's that it's nearly impossible to reach them, especially during tax season. Claimyr solves that specific problem by handling the hold time for you.
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Lucas Adams
I need to eat my words about Claimyr. After being totally skeptical, I tried it yesterday out of desperation since I couldn't figure out if my forex losses qualified for Section 988 treatment with my specific situation. Got connected to an IRS agent in about 20 minutes when I had previously wasted 3 hours trying on my own. The agent actually explained everything clearly and now I'm confident in how I'm filing. Never thought I'd say this but it was worth trying.
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Harper Hill
Another option to consider is if you're trading through a U.S. broker, you might be eligible to use marked-to-market accounting under Section 475(f) if you file an election. This lets you deduct all losses as ordinary losses without the $3,000 capital loss limitation. But you have to make this election by the tax filing deadline of the previous year, so it might be too late for your current situation.
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Mason Davis
•Is it possible to make that Section 475(f) election for next year still? My losses are small this year but I'm planning to trade more in 2025, so it might be worth considering.
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Harper Hill
•Yes, you can still make the Section 475(f) election for the 2025 tax year if you file the election by April 15, 2025. This would apply to your 2025 trading activity, not your current tax return. To make the election, you file a statement with your 2024 tax return (or an extension request) that clearly shows your intention to use marked-to-market accounting. The statement should include your name, address, tax ID, and a declaration that you're making the Section 475(f) election for your forex trading business.
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Caden Nguyen
Has anyone used TurboTax to report forex losses? I tried entering mine but the software keeps asking me for a 1099-B which I don't have for my forex trades.
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Avery Flores
•I used TurboTax last year for my forex losses. You need to manually enter them as "stocks or bonds" that don't have a 1099-B. It's under "Investment Income" → "Stocks, Cryptocurrency, etc." → then select "I'll enter my investments manually" → then choose "Stocks and bonds that don't appear on a 1099-B." It's not intuitive but it works.
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William Rivera
For your $135 forex loss, you'll most likely report it on Schedule D and Form 8949 since you only made a few trades as a casual investor. You'll need to list each trade with the date acquired, date sold, proceeds, and cost basis. If your broker doesn't provide a 1099-B (which is common for forex), you'll need to track this yourself. The good news is that your loss can offset other capital gains, and if you don't have any gains, you can deduct up to $3,000 against ordinary income. Any excess carries forward to future years. Make sure to keep detailed records of all your trades including currency pairs, amounts, exchange rates, and dates. The IRS expects you to report all trading activity even without official broker forms.
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