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?

[tagteam]

Form 8829:

[stech]

@cboizauer 

So, was I correct, by enter fake trade on Sch D?

@tagteam how else do you suggest differently?

I am using home office deduction for my office. My business use % is 10%. then calculated all expenses such as

(internet, water, gas, utility) X 10% and entered it as Other Expenses on Sch C

[tagteam]

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@stech wrote:

@tagteam how else do you suggest differently?

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Did you read my previous two posts? I outlined the procedure, which results in a net loss on Schedule C (and that, in turn, is reported on Schedule 1 and then automatically transferred to your 1040).

[stech]

@tagteam  Yes, I read it. 

Lets assume, I have $26,920 profit per 1099-B with $2,387 expenses, and $2K home office deduction. 

On Sch C, I entered, $2,387 expenses. Then Form 8829, Line 8, shows $24,533 ($26,920 from Other income including Schedule D and Form 4797 C1 - $2,387 expenses ).

My Sch C, Line 31, Net profit or (loss) has -$4,387? Did I miss something?

Line 8, on 1040 is also -$4,387

I didn't see any adjustment to calc'ed gain on 8829 as per your screenshot. Its for 2020 taxes, looks similar to Form 8829 screenshot 

[tagteam]

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@stech wrote:

My Sch C, Line 31, Net profit or (loss) has -$4,387? Did I miss something?

Line 8, on 1040 is also -$4,387

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I do not think you are missing anything; that is what I have on a test return.

[stech]

@tagteam 

@cboizauer 

I thought purpose was to show 0 value on Sch C? If I do this for 5 years straight with loss on Sch C every year, then IRS says it’s not a business it’s a hobby

when I entered income on Sch D then on 8829, does this double count income?

[tagteam]

@stech 

You should focus on the criteria the IRS considers to be necessary for your trading to be a "trading in securities business" rather than merely investing.

See https://www.irs.gov/taxtopics/tc429

The loss(es) on Schedule C should be inconsequential if your trading activities are otherwise profitable (as shown on Schedule D).

[stech]

@tagteam 

Based on 429, I am a trader. I read that before, it only says, to report expenses on Sch C. Nothing about offsetting Sch D gains down or using form 8829?

Can I list all of expenses (even non home office ones) on 8829? or should I keep expenses separate. 

I don't want to start an argument here, do you think cboizauer method is wrong?

IRS will raise red flags if I show loss yearly  Source  (Read under Practical standard for business classification)

If i use simplified method, (5 x 300 sq ft) $1,500. then 8829 won't be used? so, where would i enter Sch D gain 

[tagteam]

You should keep your expenses separate and I do not believe any "red flags" will be raised provided your trading activities are mostly profitable. Even if you are contacted, you will easily be able to explain your particular situation and provide documentation. 

Regardless of which method you use, you will have to input the expense on the smart worksheet (in TurboTax) of Form 8829. Otherwise, the program will disallow the deduction (due to insufficient income).

Finally, I do not believe it is wise (or a good solution) to enter fictitious trades anywhere on your return.

[stech]

@tagteam 

I am finalizing my return today using your method. I decided to not use Regular method for Business use, which means, it will not generate Form 8829.  Does this make any difference now? Now that I won't see that same schedule posted at https://ttlc.intuit.com/community/retirement/discussion/re-my-losses-from-the-schedule-d-then-should...

[tagteam]

The program will disallow the deduction. 

What do you mean by the "regular method"?

[stech]

@tagteam  For Business Use of Home (Form 8829) has two methods. Simplified method and regular method.  I get a bigger deduction if I use Regular method. (300 sqft x $5 = $1,500). 

[stech]

@tagteam  So, am I required to use Regular Method?

[tagteam]

Form 8829 is not filed with the return when using the simplified method. 

In TurboTax, you will see the form in the list of forms, however, since there is a worksheet specific to TurboTax on the form itself.

[stech]

Yes, I  see, if I use simplified method, Form 8829 won't be filed. Does this mean, I won't be able to do what I initially wanted to do?

And I must use Regular method?