I heard that trading currencies has more tax benefits than trading stocks. Is this true?
This is true when it comes to residents or citizens of the United States (please ignore this information if you are a foreigner – foreigners pay no taxes when trading currencies; period! They can also trade with any Forex broker in the world, unlike US persons).
US-based currency traders have a tax advantage over stock traders. Sixty percent (60%) of the capital gains from trading currencies are taxed at the lower long-term capital gains tax and only 40% of the profits is taxed at the higher short-term rate. On the other hand, all of a stock trader’s profits are considered short-term and are taxed at the higher short-term rate; in other words, stock traders do not enjoy the favorable 60/40 split that FX traders have when it comes to taxes.
Learn more about currencies in this section.