Hello, my question is that, well first let me say that I am aware that fore profits are taxable income. My question is that is it better to only pay taxes on profits you have withdrawn to your bank account and if doing so is even allowed? Thank You
United States? Tax on closed trades, not on money withdraw.
If you are in the US then you will pay taxes not only on profits that are withdrawn and not withdrawn but also on profits that are unrealized! That means if you are in a carry trade or in a high timeframe trade that keeps you in the trade for months/years, you will pay taxes on that open position if it is in profit. This is because forex is Mark-to-Market. Forex and futures are both Mark-to-Market.
Yes, you are right I agree with you.