What happens if I don’t pay taxes on my forex profits?
Question by Ted M: What happens if I don’t pay taxes on my forex profits?
My forex broker does not report my trading activity to the IRS on the 1099 form. Thus, the IRS has no idea how much money I’m making. Can’t I simply pretend I didn’t make anything for purposes of taxation? How will they ever know the difference? No bashing, please. Serious answers only.
Answer by Bash Limpbutt’s Oozing Cyst©
Don’t expect your broker to be doing business much longer if he’s not reporting transactions to the IRS.
When the IRS does catch wind of it — and they typically do sooner or later — you’ll receive a CP2000 letter advising you that you “forgot” to include some income and assessing the tax, penalties, and interest. Most likely their tax calculations will be wrong (much too high) so it behooves you to play it straight from the git-go.
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