Retail Forex traders fall under Section 988, which covers short-term foreign exchange contracts like spot Forex trades. Section 988 taxes Forex gains and losses like ordinary income.
You do not report your Forex loss on form 8949 which is for Capital gains and losses. You do not receive Form 1099-B.
Forex gains and losses are reported on your tax return as Other Income. A loss is reported as a negative number.
To report your Forex loss, please follow these steps:
- Click on Federal Taxes, then on Wages and Income
- Scroll down and locate the Less Common Income section
- Click Show more and click Start next to Miscellaneous Income at the bottom
- On the next page, click Start next to Other Reportable Income.
- Describe your gain/loss as Section 988 Forex gain/loss .