How to report Trading income as Business income, to get Home Office expense deduction.

[kiran]

I trade frequently and have +ve income (profits) from trades reported on Schedule D (per https://www.irs.gov/taxtopics/tc429).  The Business section of Turbotax Windows won't let me deduct Home Office expenses as the income on the Business section is 0 (since i've reported it on Schedule D, don't want to double-report income in Business section).

How do i transfer the Schedule D income to Schedule C/Business section so i'm able to enter Home Office expenses in the Business section and get a deduction for it?

[john-ct]

This is a tax, not a turbotax question.  Also you are referring to a personal tax product in the business tax forum.  

However, if you classify yourself as a trader (see IRS Pub. 550 - you may not qualify), then your trade income would become ordinary business income and you could deduct expenses.  You would have to keep track of the sales, profits, etc. yourself or with Quicken, Quickbooks etc. and enter only the totals on Schedule C, not D.  Or you could download the trades to Schedule D on a dummy return (don't mix up the files) and enter the totals on Sched D on the real return. Traders cannot take advantage of capital gains rates, however, as it's their business (just like real estate flippers).

[john-ct]

Adding to my answer:  Investment expenses (for non-traders) can be deducted on Sch A, subject to limitations, for 2017, but the new tax law eliminated it for 2018.

[kiran]

This is a Turbotax question (not a tax question), because IRS-Pub550 states that Traders still show transactions on Schedule D if they've not marked-to-market.  However, Turbotax won't let me declare home-office expenses on Schedule C, because it thinks I have no profits (whereas my profits are declared on Schedule D per Pub550 instructions, not under the Business Income/P&L). Pl advise how to get around this issue and show Home-Office expenses on Schedule C.

[jpatel]

John-ct is incorrect.

[fanfare]

A Professional Trader selecting MTM does not report on Schedule D, instead on form 4797. 

The reporting requirements are more stringent since there is no aggregation allowed. You have to report every trade you make.

The main advantage is there is no $3,000 loss deduction limitation.

Also if you made money last year but lost this year, you can carry back your loss and get a tax refund for last year.

Day Traders with Trader Tax Status (TTS) report differently.

[laurenross]

I'm trying to do the same thing.

[laurenross]

John-ct, There are two types of trading status:  Day trading as a business with no paying self employment taxes and the other is Mark-to market which profits are always ordinary income and there is no 3,000 limit.  I'm trying to amend and having a hard time.  This is a turbo tax question.

[ragsmuffin]

So what is correct? Just pointing out that the response is incorrect is not helpful... 🙂

[chicagotrader]

john-ct is wrong. kiran is correct. What's the answer? I'm having the same issue.

[fanfare]

If your business (Day Trading) shows  no income,

there is nothing to be offset by expenses .