in [Event] MetLife + TurboTax | Ask the Experts About Your Taxes
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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:
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/
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:
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/
I'm using the free edition. I read that it doesn't support 6781 and I couldn't find the form in that edition.
I expected ro have to get the paper version and mail my return.
When I printed my return I was surprised that the completed 6781 was already there.
Good news, but the program should have said something about it since I could have submitted it electronically.
Thank you for the in depth explanation, this helped!
Geoffrey,
Somehow when I entered my gain info, I didn't get the 60% longterm and 40% shorterm split you mentioned above. My $4500 in gain was actually increased my tax by 57%. Did I do something wrong here? Turbotax asked for Total Profit $6000 and total loss $1500, then it calculated box 11 total profit .
you have either a gain or a loss for the year not both .
choose the applicable box and leave the other box empty
the amount to enter is on line 11 of your substitute 1099-B.
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