Taxing capital gains from foreign exchange trading can be very complex and confusing, but it is an important factor to consider when investing in the forex market. In this article, we’ll provide an overview of the basics of capital gain tax on forex transactions, and what you need to know to remain compliant. rates schedule
Capital gain tax rates are typically determined by marginal tax rates, which divides income into different brackets and applies a lower rate of tax to each bracket.
The following is the 2021 long-term capital gains tax rates based on filing status:
- Single taxpayers: 0% on gains up to $40,400, 15% on gains of $40,401 - $445,850, and 20% on gains of $445,851+
– Married filing jointly: 0% on gains up to $80,800, 15% on gains of $80,801 – $501,600, and 20% on gains of $501,601+
– Head of household: 0% on gains up to $53,600, 15% on gains of $53,601 – $469,050, and 20% on gains of $469,051+
- Married filing separately: 0% on gains up to $40,400, 15% on gains of $40,401 – $250,800, and 20% on gains of $250,801+
In addition, special capital gains tax rates provide additional tax relief for certain qualified investments. These include qualified small business stock (QSBS) and qualified real estate investment trust (REIT) stock.
