As someone who both works at TurboTax and who has traded
regulated futures contracts myself, I know exactly what you are asking about.
Please allow me to explain the matter of reporting
futures trading for tax purposes in some further depth. As defined by the Internal Revenue Code,
futures are considered Section 1256 Contracts (sometimes known as Straddles).
For tax reporting purposes, futures fall under the
mark-to-market category, in that they are marked-to-market prices as of
year-end.
Trading gains and losses end up going on Form 6781,
subjecting the gains (or losses) to 60% long-term and 40% short-term capital
gains tax treatment, as the amounts "flow through" directly from
there onto your Form 1040 Schedule D, and ultimately back to your Form 1040.
Thus, in your case, let's say you experienced $10,000 in futures trading losses for 2016. You would then receive the benefit of reporting a $6,000 long-term capital loss, plus a $4,000 short-term capital loss, both on your 2016 income tax return.
Many traders who engage in such sophisticated options and
futures trading use professional tax preparers, but you can enter them in
TurboTax too.
You can easily go right to the TurboTax Section 1256 (futures) contracts section of the program. Simply type in the words "Section 1256 contracts and straddles" into the search box on your TurboTax screen. Then you can select the "Jump To" link that will appear after you hit the "Find" button, and you will be taken to the appropriate place in the program. Please see the attached screen-capture for an illustration.
Alternatively, and mechanically in TurboTax, you can also follow this data entry pathway:
- Find the FEDERAL TAXES tab
-
Find the WAGES AND INCOME tab
- Find the EXPLORE ON MY OWN option (this may require you
to click through one or two other screens beforehand)
- Find the INVESTMENT INCOME sub-group
- Find the CONTRACTS AND STRADDLES line, and click the
start button
- Answer YES that you had Sec. 1256 contracts
- Don't make any special elections selections unless they
apply to you
- On the CONTRACTS & STRADDLES page, choose the box
next to the Sec. 1256 Contracts marked-to-market
-
Click continue, and from there TurboTax will take you
through the necessary questions and answers tree.
Hopefully this answer has now provided you with what you
need to know in order to correctly file your tax return using TurboTax. If you still have additional questions about
entering your trades, or if you need other help, then please feel free to call us (for free as a TurboTax Premier customer) and speak to a live agent. Here is a link to our webpage where you can create a customer support ticket:
https://support.turbotax.intuit.com/contact/
Thanks for asking your question, and good luck with your futures trading activities.
