I am a self-employed US citizen, and earn a small annual income, and don’t work for an employer.
I have to file a 1040, Schedule C, and schedule SE at the end of the year for the self-employment income I earn (as well as paying state taxes).
I have been doing this since 2008 which is the last time I worked for an employer.
I prepay taxes quarterly in increments throughout the year (4 times a year) because the IRS will penalize you if you owe more than $1000 in taxes at the end of the year. Therefore you are required to pay a little at a time throughout the year.
This year I learned about Forex, and since July 2010 I have lost $5000 in Forex with little gain.
This huge loss was from various non-US broker accounts (and 1 US broker account).
So I won't be getting any 1099 forms from the US broker since there was no gain there (a loss of $800 from the US broker).
Now that it is tax time am I suppose to subtract the $5000 Forex loss from my yearly gross income on the 1040?
If so, this will give me a smaller net income that won't be taxed as high?
I have already prepaid 4 quarterly payments in taxes for my self-employment income earned since last January 2010.
But now that there is a massive Forex loss then that will mean I may have overpaid some of my quarterly taxes if it is true that I subtract the Forex loss from my self-employment gross profit.
If I subtract the Forex loss from my self-employment gross income will the IRS basically give me back some of the quarterly taxes I already overpaid since the Forex loss will lower my net income?
In this sense the IRS gives me back some of the $5000 I loss in Forex by returning to me some of the taxes I already prepaid for self-employment tax.
Or am I getting this wrong?
Maybe it is too simple to add the $5000 Forex loss to line 21 on the 1040 and subtract it from my self-employment gross income?
All the proof of my loss is in all my MT4 history tabs at the various brokers where I deposited and loss money. I saved all the usernames and passwords.
I have to file a 1040, Schedule C, and schedule SE at the end of the year for the self-employment income I earn (as well as paying state taxes).
I have been doing this since 2008 which is the last time I worked for an employer.
I prepay taxes quarterly in increments throughout the year (4 times a year) because the IRS will penalize you if you owe more than $1000 in taxes at the end of the year. Therefore you are required to pay a little at a time throughout the year.
This year I learned about Forex, and since July 2010 I have lost $5000 in Forex with little gain.
This huge loss was from various non-US broker accounts (and 1 US broker account).
So I won't be getting any 1099 forms from the US broker since there was no gain there (a loss of $800 from the US broker).
Now that it is tax time am I suppose to subtract the $5000 Forex loss from my yearly gross income on the 1040?
If so, this will give me a smaller net income that won't be taxed as high?
I have already prepaid 4 quarterly payments in taxes for my self-employment income earned since last January 2010.
But now that there is a massive Forex loss then that will mean I may have overpaid some of my quarterly taxes if it is true that I subtract the Forex loss from my self-employment gross profit.
If I subtract the Forex loss from my self-employment gross income will the IRS basically give me back some of the quarterly taxes I already overpaid since the Forex loss will lower my net income?
In this sense the IRS gives me back some of the $5000 I loss in Forex by returning to me some of the taxes I already prepaid for self-employment tax.
Or am I getting this wrong?
Maybe it is too simple to add the $5000 Forex loss to line 21 on the 1040 and subtract it from my self-employment gross income?
All the proof of my loss is in all my MT4 history tabs at the various brokers where I deposited and loss money. I saved all the usernames and passwords.