Cashback bonuses are given for every trade. While it is common for withdrawable bonuses to be taxable, what is the tax system for cashback bonuses? In conclusion, cashback bonuses are taxable. Therefore, just like profits earned from trading, you need to file a tax return. This article will explain in detail about taxes and tax returns for overseas forex trading. However, be aware that the tax system differs depending on the country you live in and whether the forex is domestic or international. Contents 1. Taxes and tax returns on cashback from overseas forex 1.1 Cashback is taxable 1.2 Calculate profits earned from January 1st to December 31st 1.3 When filing a tax return, it will be classified as miscellaneous income 1.4 Be careful as losses cannot be carried forward in overseas forex trading 1.5 [Tax saving] Use expenses to reduce taxes as much as possible 2. Summary Taxes and tax returns on cashback from overseas forex trading This article will introduce the taxes on cashback. Cashback is taxable, however this may vary depending on your place of residence. Unrealized losses and gains are not taxable. Profits are treated as miscellaneous income. Losses cannot be carried forward. Let's look at each point in detail. Cashback is taxable. Cashback is money returned in overseas forex trading based on trading volume. This is treated the same as regular cash and is therefore subject to tax. For example, let's say you receive a 500 yen cashback for every lot (100,000 currency units) traded. And let's say you trade 100 lots and make a profit of 100,000 yen. If there were no cashback, the 100,000 yen profit would be taxed as is, but with cashback, the tax would be 100,000 yen + 50,000 yen = 150,000 yen. Such cashback can be withdrawn and is considered profit just like cash, so it is subject to tax. When filing your tax return, do not separate cashback from simple profits; calculate everything as profit. However, tax laws differ depending on your place of residence. If you live in Japan, cashback, as well as all profits from overseas forex trading, are taxable. However, if your place of residence is different, it may be tax-exempt, so be careful. In tax havens such as Singapore and Hong Kong, where taxes are significantly lower than in Japan, you can reduce your tax burden considerably. This is one reason why investors who make large profits often reside overseas. Calculate your profits from January 1st to December 31st. For tax returns, you calculate and declare profits (including cashback) earned from January 1st to December 31st. The filing period is from around February 15th to March 15th of the following year. The filing period may vary slightly from year to year, so be sure to check each time. If you fail to file a tax return despite being taxable, you may be considered to have evaded taxes and face heavy penalties. Make sure to file your tax return correctly and avoid any omissions. You can print the tax return form from the National Tax Agency's website. There are no specific documents required to prove profits from overseas FX trading. Calculate your profits and losses using the transaction history sent by your FX broker. You can print the tax return form from the National Tax Agency's website. The required information is written in detail, so it's a good idea to review it before creating your tax return. Unrealized gains and losses are not taxable. In FX trading, only profits realized between January 1st and December 31st are taxable. Unrealized gains and losses are not included. Therefore, even if you have realized profits of +1 million yen and unrealized losses of -2 million yen as of December 31st, taxes will be levied on the realized profit of 1 million yen. If your realized losses become -5 million yen after January 1st of the following year, you may find yourself in a situation where you "have to pay taxes but don't have the funds on hand," so be careful. Note that taxes are levied regardless of whether you withdraw the money or not, so taxes will be levied even if the money remains in your overseas FX account. When filing your tax return, it will be classified as miscellaneous income. Profits from overseas FX trading are classified as miscellaneous income. Remember that an income tax rate of 5-45% (comprehensive tax rate) will be levied on your profits. If your profits are small, you will pay less tax, but if you make a lot of profit, you will pay a lot of tax. The following people are subject to filing a tax return for overseas FX trading. Salaried employees - Company employees, part-time workers, etc. - If you make more than 200,000 yen in profits annually, you need to file a tax return. Non-salaried employees - Self-employed individuals, housewives, students, people with no income, etc. - If the sum of your annual income and FX profits exceeds 480,000 yen, you need to file a tax return. The amount of profit that requires filing a tax return differs between salaried employees (company employees, part-time workers, etc.) and non-salaried employees (self-employed individuals, students, etc.). In addition, miscellaneous income includes profits from side jobs such as affiliate marketing and cryptocurrency, so calculate by adding everything up. Tax returns may not be required in cases of low salary income If your annual income does not meet the threshold, you may not be required to file a tax return. ... Continue reading Are overseas FX cashbacks taxable? About the necessity of filing a tax return