Day Trader tax help
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Char1135
Returning Member

Day Trader tax help

I am a self-employed day-trader. I moved cross country to Chicago to trade commodities in 2019.

 

I trade everyday and in big amounts, I'd be shocked if IRS didn't count as trader as we trade 1ks worth of contracts each day. In addition to trading I had a few side jobs to help pay bills.

 

Can I consider myself a business and a trader in IRS terms?

If so do I report my profit/loss in Schedule C as well as my business expenses as a self-employed business owner?

 

Or, if not, do I report my profit/loss as a 1099-B under contracts and straddles and am not able to deduct business expenses used for trading? I had moving expenses, rent as a home office, utitlies, etc...

If I have to report profit/loss as a 1099-B, can I still deduct my trading expenses somewhere else?

 

Any help would be greatly appreciated. If need be I can upgrade to home & biz turbotax if recommended.

6 Replies
Rick19744
Level 11

Day Trader tax help

A couple of links that will provide some good information:

https://www.marketwatch.com/story/tax-strategies-for-day-traders-2015-02-25

 

https://greentradertax.com/trader-tax-center/trader-tax-status/how-to-qualify/

 

 

*A reminder that posts in a forum such as this do not constitute tax advice.*
fanfare
Level 15

Day Trader tax help

you can't file as Professional Trader unless you made the required election attached to your 2018 tax return by the due date of your tax return.

Without it, you are still considered an Investor.

 

To file as Professional Trader for 2020, make the election now.

Rick19744
Level 11

Day Trader tax help

@fanfare this only applies if the trader wants to make a Section 475 election.

*A reminder that posts in a forum such as this do not constitute tax advice.*
fanfare
Level 15

Day Trader tax help

Exactly and this election is required if the filer wishes to be treated as a Professional Trader and avoid Schedule D.

 

Rick19744
Level 11

Day Trader tax help

A taxpayer can be a trader and NOT make the Section 475 election.

 

https://www.thetaxadviser.com/issues/2010/feb/sec475mark-to-marketelection.html#:~:text=Under%20thos...

*A reminder that posts in a forum such as this do not constitute tax advice.*
fanfare
Level 15

Day Trader tax help

@Rick19744 

Please explain if you are saying a trader can file in any way different from an Investor.

IRS does not recognize the notion of trader.

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