Manage your trading taxes more income tax on currency trading If you dread unraveling the tax implications of your trading activities each year, it’s time to take hold of these issues. With a few basics under your belt, you can partner with your tax preparer to manage your trading taxes more proactively, resulting in less aggravation and, hopefully, a lower tax liability. Know your tax terminology Cost basis is a term you’ll hear often when discussing taxes for trading and investing. It represents the amount you originally paid for a security plus commissions, and serves as a baseline figure from which gains or losses are determined.
If your position’s value has risen above or dropped below your cost basis by the time you close the position, it will generate either a capital gain or capital loss. Individual traders and investors pay taxes on capital gains. 3,000 of losses beyond your offsetting gains. Set up your positions in Maxit Tax Manager Using the Maxit Tax Manager regularly can save you tremendously in the headache department later on.