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1099b2021
Returning Member

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

@cboizauer Thanks for all the helpful pointers. I am sorry for the noob question, I could not figure out where the option to add capital gains row(s) is. I found the pdf form under 1040/1040sr worksheet, but could not edit it. If possible at all, can you please show me the steps, PLEASE. Or if there is a mock form to share, it will immensely help first time day trader filers such as myself. 

cboizauer
Level 3

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

You are supposed to individual list your trades on form 8949.  And than transport those figures onto schedule D. 

 

Turbo tax has a place for you to do so and they fill out the form 8949 for you.

 

If you are like me and have over 1000 trades a year.  I put the total numbers from my 1099b on this lines and include a copy of the 1099B with my tax return.  

 

 

 

1099b2021
Returning Member

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

Ok, thanks. I was referring to an earlier response to another comment from you:

 

"Step 3:  get the grand total of expenses from schedule c.  Report this number as a negative number on the 1099 income.  Meaning create a new line item for short term gains as a negative number (aka a loss) to round off expenses from schedule c.  Do the same for home office expenses.  Meaning there should be two negative short term gains/losses reported on the capital gains worksheet to ‘even’ out the expenses.  If that makes sense .  It helps to make notes of this if you are sending in your tax return to explain it.  But that is not necessary.  "

 

I could not figure out how I add more lines in Schedule D. If there is a sample you can share (mock statement or screen) I can work from there. 

 

Thanks 

cboizauer
Level 3

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

You need to zero out the expenses.

 

Meaning create a new line item on hate 8949.  Carry over the expenses from schedule C and put them on your 8949 as a trading loss.  

 

 

cboizauer
Level 3

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

For example:

 

Capital gains = 100k (reported on 8949 capital gains worksheet)

Expenses =    20k  (schedule C)

 

New 8949:

Create line item... aka new trade signifying you lost 20k on that trade

 

Thus the expenses come off the capital gain and make the new capital gain 80k 

fanfare
Level 15

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

@cboizauer 

If you filed this way you are taking the same loss twice in two places.

Have you actually filed this way and gotten approved by the IRS ??

That would surprise me.

cboizauer
Level 3

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

There is only one deduction.  Maybe I am not explaining correctly.

 

Filed this way for 4 years.  It is the way to do it.

 

Greentradertax.com has some good information regarding and a booklet to explain the ins and outs of traders taxes.  

stech
Level 3

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

This is incorrect. You are taking loss/expenses twice 

cboizauer
Level 3

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

Need to zero it out and denote carryover to schedule d .  Footnotes required.  

MarilynG1
Expert Alumni

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

@cboizauer Click this link for info on How to Enter Capital Loss Carryover

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stech
Level 3

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

If I post all gains on Sch D & expenses on Sch C, doesn't my Capitals gains get taxed first (only on gain) then comes in my expenses which impacts ordinary income? so Sch C won't reduce my capital gains, but ordinary income

 

If I post only expense on Sch C for 2 yrs in 5yrs , doesn't that raise red flags, as there is rule If a business reports a net loss in more than two out of five years, it's presumed to be a not-for-profit hobby.

 

I am  day trader & do have over 700+ trades transaction, I don't need or want Market-to-Market status. 

 

Can I post all expenses to Sch C without LLC formationa? I have over $40K gains (no losses 🙂 )

 

cboizauer
Level 3

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

You do not need to have an llc to qualify as a trader.  You need to have over 4 trades per day for at least for days per week for the entire year.  You are then considered a sole proprietor trader and can deduct expenses for your business.

 

To do so....

Put expenses on schedule C.  

 

Lets say expense equal 10k on your schedule C

 

Put a line item at the end of it for -10k and a footnote that explains you are carrying over the 10k to schedule D.

 

then put a -10k trade at the end of schedule D with a footnote that explains this was the carryover from schedule C.  Thus the expenses are 0'd out on schedule C and come off your your schedule D capital gains.

 

Regarding the losses.  I have no idea about the 2 out of 5 year thing.  I doubt it but maybe. 

 

I know you do have to you have to have market to market to have any capital losses over 3k.  

stech
Level 3

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?


@cboizauer wrote:

You do not need to have an llc to qualify as a trader.  You need to have over 4 trades per day for at least for days per week for the entire year.  You are then considered a sole proprietor trader and can deduct expenses for your business.

 

To do so....

Put expenses on schedule C.  

 

Lets say expense equal 10k on your schedule C

 

Put a line item at the end of it for -10k and a footnote that explains you are carrying over the 10k to schedule D.

 

then put a -10k trade at the end of schedule D with a footnote that explains this was the carryover from schedule C.  Thus the expenses are 0'd out on schedule C and come off your your schedule D capital gains.

 


 

Isn't this double counting expenses? First at Sch C and then again on Sch D?

 

 

cboizauer
Level 3

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?

No.  Because you are zeroing them out on schedule C.  No deduction there.

 

And carrying them over to schedule D.  

stech
Level 3

I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?


@cboizauer wrote:

No.  Because you are zeroing them out on schedule C.  No deduction there.

 

And carrying them over to schedule D.  


Sorry,  I am not seeing the clear picture.

 

Sch D:

Line item 1: $50K gain

Line item 2: $10K expenses

 

Sch C:

Item 1: $10K expenses,

 

Doesn't this net to $30K? and not $40K?

 

feel free to upload screenshot of what you mean? I am using 1040 excel https://sites.google.com/view/incometaxspreadsheet/home/download

 

 

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