How do i report foreign exchange losses ? (2024)

• TurboTax Premier Online

‎January 27, 20201:43 PM

Foreign exchange (Forex) traders fall under Section 988, which covers short-term foreign exchange contracts like spot Forex trades.

Forex gains and losses are reported on your tax return as Other Income. Report a loss as a negative number.

To report your Forex loss, please follow these steps:

• Click onFederal Taxes (left menu)then onWages &Income/Income & Expenses(up top)
• UnderAll Income, locate theLess Common Incomesection
• ClickShow moreand clickStartnext toMiscellaneous Income, 1099-A, 1099-Cat the bottom
• ClickStartnext toOther Reportable Income
• Describe the amount asSection 988 Forex gain orloss (enter a negative number for a loss)

Foreign Exchange Reporting Discussion

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Foreign exchange (Forex) traders fall under Section 988, which covers short-term foreign exchange contracts like spot Forex trades.

Forex gains and losses are reported on your tax return as Other Income. Report a loss as a negative number.

To report your Forex loss, please follow these steps:

• Click onFederal Taxes (left menu)then onWages &Income/Income & Expenses(up top)
• UnderAll Income, locate theLess Common Incomesection
• ClickShow moreand clickStartnext toMiscellaneous Income, 1099-A, 1099-Cat the bottom
• ClickStartnext toOther Reportable Income
• Describe the amount asSection 988 Forex gain orloss (enter a negative number for a loss)

Foreign Exchange Reporting Discussion

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Thank you, Mr. Dawn for your help. I will try on Turbo and then give my comments.

• Another pending issue is: where do I enter additional foreign tax credit for additional taxes paid in 2020; when income on sale of flat and foreign tax credit was filed in 2019. If I enter this additional foreign tax credit on form 1116 without any income from sale of flat in 2020, I get nothing because 1116 uses ratios. Is there any other place where I can enter additional tax paid in foreign income?

@geauga You could Amend your 2019 return to add the additional Foreign Tax paid on the 2019 income.

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My currency trading is a loss for 2022.

Example, I entered "IRC 988" for description, "-$50,000" for taxpayer amount under Misc. Income; other reported income section

My question is, does this apply for Federal and certain State, such as California ? because under the State of California reporting, Misc.; Other Adjustment to Income; do I enter the same for Federal the -$50,000 loss?

Per our Expert DawnC, Forex gains and losses are reported on your tax return as Other Income. Report a loss as a negative number.

To report your Forex loss, please follow these steps:

• Click onFederal Taxes (left menu)then onWages &Income/Income & Expenses(up top)
• UnderAll Income, locate theLess Common Incomesection
• ClickShow moreand clickStartnext toMiscellaneous Income, 1099-A, 1099-Cat the bottom
• ClickStartnext toOther Reportable Income
• Describe the amount asSection 988 Forex gain orloss (enter a negative number for a loss)

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**Mark the post that answers your question by clicking on "Mark as Best Answer"

Hi,

How do I carry this over to the NIIT form? Basically have around $100K in 'interest' from foreign government bonds, but it is offset by approx $100K in that country's currency depreciating. So in USD terms made ~$0 round-trip (USD->forex->bond->forex->USD).

Even if I add the loss as negative income, TurboTax wants me to pay ~$3k in NIIT. But as far as I can tell, treasury regulations clearly say "... foreign currency gain or loss that otherwise is not subject to the Self- Employment Contribution Act is appropriately treated as net investment income. ". So my understanding is I should be able to adjust the NIIT to deduct the loss.