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]

Technically you dont report expenses on schedule D.  They are on schedule C.  You just need them to come off the captial gains income you are showing which is on schedule D.

It will look like this 

Schedule C :

Individually list expenses. 

Total

10k.

You need to zero out the expenses.  So either do that with a footnote explains such.  OR if you are using turbo tax make a new expense line item in the form of a negative 10k.

New Grand total on Schedule C  is now 0.

Schedule D:

Capital gains and losses: 50k

-10k (expenses carryover from schedule C)

capital gains and losses on schedule D :  40k

The easiest way to do this is on turbo tax is to make a new "fake" trade on -10k.  Thus it comes off the 50k total. 

[cboizauer]

So the expenses are listed on schedule C.  But you are not getting any kind of deduction there because the final total is marked as 0 

[stech]

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@cboizauer wrote:

So the expenses are listed on schedule C.  But you are not getting any kind of deduction there because the final total is marked as 0 

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I don't get Sch C offset,

see photos

https://ibb.co/8j40Kzy
https://ibb.co/gJcyRBP
https://ibb.co/10059jN

I thought about just taking it off the 1099B total, but it would raised red flag

[cboizauer]

You are just taking them off your 1099B in theory.  To be technically 1099b income is reported on schedule D.  You are taking them off schedule D by listing them on you schedule C then carrying that number over to your schedule D as a negative number.  (or a lost trade)

You just need to list the expenses on schedule C because that is the only way the goverenment gives people to list their expenses.  List them on schedule C.  Make it a 0 when you are done.  Either manually (if not using turbotax) or make a expense that is negative 10k to make the grand total 0 on schedule C.

[stech]

@cboizauer 

what I don’t understand is when you say list expenses on Sch C & make expense $0

Can you share TurboTax screenshot? 

did you see my screenshot?

[cboizauer]

So it looks like ur not using turbo tax . 

You prob should chop up ur expenses as a 10k single line item will be a red flag to the irs.  

[cboizauer]

I have no screenshot l.  I have not done my taxes for this year.  And will not until September (filing extension).  

you need to get schedule c to equal 0.  Try putting the negative 10k on 27a.  

[stech]

@cboizauer 

This may take few secs.

download excel [document removed]

goto [image removed]

upload screenshot so that all can learn 

[stech]

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@cboizauer wrote:

you need to get schedule c to equal 0.  Try putting the negative 10k on 27a.  

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When you say negative expense? wouldn't that generate Profit in line 29?

[cboizauer]

the negative expense is fake.  It’s to balance out the other expenses.  It really matter not where my put it or if you put it at all.  Just make the total expenses on schedule c equal 0.  

and put a negative short term trade in your schedule D to represent the expenses.  

[arweiden]

What is the point of making it 0 on Schedule C?   To avoid an IRS flag?  Why not just input the actual expenses and footnote to explain they are for day trading expenses versus offsetting from Sch C to Sch D? 

[cboizauer]

https://greentradertax.com/category/trader-tax/

https://greentradertax.com/how-to-structure-a-trading-business-for-significant-tax-savings/

[arweiden]

Thanks cboizauer , I actually read through this documents and it makes more sense but I think the problem lies in TurboTax.  It wont let you deduct home office expenses without any income, so do you just put those expenses on a different line (e.g. startup costs)?  That's the challenge I'm having.  I actually agree with the offset as it's way more likely not to get flagged and cause an audit.  Even if it does, it can still be explained.

[cboizauer]

get the grand total for office expenses.  But income in for the business in that amount to zero out the home office.  

then deduct that amount from worksheet 8949 in the form of a short term trading loss. 

[stech]

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@cboizauer wrote:

get the grand total for office expenses.  But income in for the business in that amount to zero out the home office.  

then deduct that amount from worksheet 8949 in the form of a short term trading loss. 

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this this video helps?

https://youtu.be/_jWdfZQYf2M?t=820