GeorgeM777
Expert Alumni

Deductions & credits

Yes, as to subscription fees, market data fees, equipment like computers, books or education courses related to trading.  Margin interest falls into a different category.  Margin interest, that is, money that you borrow to purchase taxable investments, is deductible provided you itemize your deductions.  And there are limitations to deducting margin interest in that the deduction cannot exceed your net investment income.  

 

Your expenses associated with your trading business are reported on Schedule C, Profit or Loss From Business.  However, you will have no income to add to Schedule C because your trading income is all characterized as capital gain or capital loss income (this assumes you have not made the mark to market election under Section 475(f) of the IRC).  Capital gains/losses are still reported on Form 8949, or Schedule D.  Thus, you have no "earned income" as that term is defined under the IRC.

 

Because you have no income to report on Schedule C, you are not eligible for the home office deduction.  The home office deduction is only available if you have net income from your business.  However, your home office expenses can be carried over to the next year.

 

Health insurance deductions are not reported on Schedule C.  Self-employed health insurance is an adjustment to income and is reported on Schedule 1 to the Form 1040.   The deduction cannot exceed the earned income you collect from your business.   As a trader (who has not elected mark to market) you will have no earned income.  Rather, as noted herein, your gains/losses from your trading business are characterized as capital gains/capital losses. Thus, with no earned income from your business, you will not be able to deduct your self-employed health insurance.  

 

@sam992116 

 

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