Designation of Eurex Deutschland as a “Qualified Board or Exchange” for purposes of Section 1256(g)(7) of the United States Internal Revenue Code
On 7 February 2013, Eurex Deutschland announced that the U.S. Internal Revenue Service (“IRS”)has designated Eurex Deutschland as a “Qualified Board or Exchange” for purposes of Section 1256(g)(7)of the U.S. Internal Revenue Code. This ruling, effective for all contracts entered on or after 1 March 2013, means that U.S. persons that trade at Eurex Deutschland may receive “60/40 tax treatment” in the same way when trading at other U.S. futures exchanges.
Anyway i like the Futures Tax Liability at 60/40 which like others have mentioned 60 % of Profits taxed at 15 %, and 40 % of your Trading Profits at your regular rate.
2013 Rate Brackets: 2013 tax bracket rates
By Kay Bell • Bankrate.com
Taxes » Tax Brackets » 2013 Tax Bracket Rates
With the enactment Jan. 2, 2013, of the American Taxpayer Relief Act of 2012, the six income tax brackets that were created more than a decade ago and which had been scheduled to expire at the end of 2012 were made permanent. In addition, a new top tax rate was added. For the 2013 tax year (returns due April 15, 2014), the seven individual income tax rates and the earnings to which they apply are shown in the table below.
So you have 60% of Trading Profits Taxed at a 15% rate and the remaining 40% taxed at your Rate in the table for a combined average from the two rates is your Total Tax liability if you Trade Futures Contracts like Gold and Crude and other Futures, even SPX.
Do your research on what gets the 60/40 Rate, and as some have mentioned 1099 is single Line input and Every Trade does not have to be listed, just Total Profit above what you started with. POTENTIAL TAX ADVANTAGE WITH FUTURES - Blended Tax Rates and Capital Gains -
The following user says Thank You to sandptrader for this post:
I had a profitable year I did the 6781 which, had me put my short term capital gains(40%) on Schedule D line 4 and long term capital gains(60%) on Schedule D line 11.
to complete Schedule D and all my profits are from trading Future contracts (ES,YM) line 7 you put same as line 4 and line 15 you put same as line 11. Then line 16 'Combine lines 7 and 15 and enter the result' which means you add the short and long term capital gains you spit up on form 6781 back together.
then line 16 states "If line 16 is a gain, enter the amount from line 16 on Form 1040, line 13," and my doing this you end up getting taxed on all of it as regular income and you don't get the 60% long term capital gains tax.
Then you go line 17 =yes, line 18=0, line 19=0, line 20 =yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040, line 44 (or in the instructions for Form 1040NR, line 42). Do not complete lines
21 and 22 below.
So I go to the Qualified Dividends and Capital Gain Tax Worksheet I did it 3 times and each time by IRS math. It flips the numbers and has me calculate my 15% tax on my short term capital gains (40% of futures contracts not the 60%) using craze math. then once you have that # you go and look at Tax table and enter it on line 44.
The outcome is you pay regular income taxes on 100% and on your short term you pay an extra 15% so this tax advance sucks.
I called the IRS waited one hour and once I say what I was doing and used the name '1256 contracts' They said they can not help me and I needed to look on there website.
Here is my question has anyone REALLY know how to enter the 60/40 on the 1040 ?
Even if you had your accountant do it its not that hard to pull your 1040 (last years) out and see if he did what I did and you are over paying or if he did it right and what does the Schedule D look like.
I think the IRS does not want to help me because 90 percent of day-trader over pay their taxes.
The way I see doing it is leave part 3 of Schedule D blank. on my 1040 line 13 put my short term capital gains (40%)amount which it will get taxed at regular income Then going into the 'tax table' figure out the long term capital gains(60%) and put that amount on line 44 on form 1040.
Anyone who has had a profit trading 1256 contracts I would love to hear from you Thanks LD
It isn't that simple. Do you have other income? If so then it may be that you are not figuring the worksheet correctly. My only income comes from section 1256 contracts so my results may different than yours. I can send you a sample return though that might be helpful.
The following user says Thank You to wirechild for this post:
That's good info. I've been thinking about Eurex futures lately.
The one question I have though is if I trade Eurex futures, do I only owe US taxes, or would their be EU tax liabilities as well? (I'm a US citizen, trading on US soil, from a US broker.)
If you have any info, I'd appreciate it.
The following user says Thank You to BlackSwan04 for this post:
Awesome. That's perfect!
Yeah I've been doing research off and on about it and it seems like the fact that no one ever mentions paying foreign taxes, or that I don't need a foreign tax ID number to trade it, implied I would only owe domestically. Thanks for the (non CPA, unofficial ) confirmation.
Btw, Which eurex products do you trade? I'm looking at swing trading FGBS.