As a Stock Trader with home office can I report my Capital Gains on line 8 Sch C along with my Home Office expenses , instead of Sch d ?

[ThomasM125]

@dayt8er If you don't report your income on a schedule C, then you are considered an investor rather that self-employed. As such, you are not considered as being employed. This may have advantages with regard to your income tax rate and not having to pay in social security tax, but as such you will not be considered as being employed and that will prevent you from being able to qualify for the child care credit.

[dayt8er]

Thank you for your response. So then I guess anyone who has one spouse electing to use a dependent FSA through their work where the other is running any business that happens to have an operating loss (not the case here, but given that the revenue is showing up as investment income), is just out of luck? Even though they worked?

In this case, my earnings exceeded the minimum monthly threshold, but there is no way to modify the earned income sheet. Sounds like the IRS doesn't fully recognize day trading as real "work".

I do realize there is a benefit to not paying the SE tax here, but for anyone running a legitimate business (even non-trading) and just had a bad year or is starting out and has expenses exceeding revenues, they are getting penalized. Not your fault, but it would be nice to see the IRS address this one.

[ThomasM125]

Investment income is not considered to be from a trade or business since it is passive in nature. If you have a substantial amount of time invested in it, to the point where it is not a passive activity, you should report it as self-employment income, thus requiring a schedule C to be filed. In that case, it is no longer considered passive and the income generated will be considered earned income.

[swamp100]

@emayteetea Thanks for your great advice!

I have a related question: For year 2021, I have substantial trading capital gain (let's use $50K as an example). However, I have large (>$100 K) capital loss carryover from previous years. As a result, my Y2021 reported overall capital gain/loss is -$3,000. 

For the home office deduction purpose, does my trading business have a gain of $50K, or have a loss of $-3K for Y2021? Would I still be able to deduct home office expense in this situation?

Thanks very much!

[swamp100]

Thanks for your great advice!

@AnnetteB6

I have a related question: For year 2021, I have substantial trading capital gain (let's use $50K as an example). However, I have large (>$100 K) capital loss carryover from previous years. As a result, my Y2021 reported overall capital gain/loss is -$3,000. 

For the home office deduction purpose, does my trading business have a gain of $50K, or have a loss of $-3K for Y2021? Would I still be able to deduct home office expense in this situation?

Thanks very much!

[justbill9]

Turbotax is disallowing my home office deduction because my expenses are shown on SCH C and as expenses are a negative number.  I am profitable but this profit is shown on form 9747 which turbotax is not recognizing to allow a home office deduction.  Is there anyway I can get turbotax to recognize my bussiness had a profit and allow me the home office deduction?  I am an active MTM trader of securities approver with the IRS already.  Thank you for any help.

[DNMH]

I use Proseries, and on the 8829 line 8 calculation Smart Worksheet, there is a line that asks "calculated gain from business use of this home on Sch D or Form 4797".  That is where you will put the positive 4797 amount.

[AnnetteB6]

Take a close look at the following TurboTax help article.  Inside the article there are several links to expand the information.  Toward the bottom is one for How to claim home office expenses via a manual Schedule C adjustment.  The steps in that section will allow you to enter your income and claim the home office.

How do I report my trader activity with (or without) Section 475(f) election in TurboTax?

@justbill9 

[justbill9]

Thanks for your help!

[Doony]

I currently list my profession as an investor. Gains and losses on Schedule D. This is my primary income. I have not written off expenses on Schedule C because I fear (a) it looks weird (b) I will incur social security tax. You think it is OK to list gains on Schedule D and write off business expenses on Schedule C? Please note I take standard deduction.

[jorgito153]

No, you can't write off those expenses on Schedule C, unless you are an active trader and apply Section 475 with the IRS, mark-to-mark election. 

[Doony]

Hey there. I've read some materials and other discussions on here and it seems people are conflicted on this. Some guide to gains / losses from investments on Schedule D and business expenses on Schedule C. Some state that if Schedule C is a loss there won't be a self-employment tax. However, in practice, who knows...

[1234x]

As a MTM trader my Schedule C is showing up with a loss because all trading income is on Form 4797.  The loss does not transfer to my Form 1040 Schedule 1 Line 3.  Is there a way to fix this?

[DavidD66]

If your loss from Schedule C is not flowing to Schedule 1, check to see if you checked box 32a for "All investment is at risk".  If that box is not checked, your loss will be disallowed and not show on Schedule 1.