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JL5
New Member

Day Trader (with over max write off loss) + Day Job. Benefit to filing as Day Trader?

I have a day job, but am transitioning into Day Trading Stocks, hopefully. I make enough trades per day to qualify. You can only write off a maximum of $3k or so in day trading losses, which I went well over (the remainder can be carried through to following years). I also insured many other expenses form day trading such as internet, educational services, and informational services. Since I went over the max $3k/year write off, I was wondering if there is a point in trying to file as a day trader.  E.g., will the extra write offs be able to be carried over into following years as well since I hit the max?
8 Replies
fanfare
Level 15

Day Trader (with over max write off loss) + Day Job. Benefit to filing as Day Trader?

Just doing Day Trading is not enough to qualify for Professional Trader status.

Unless you are trading just about every business day in a separate account dedicated to your business,  IRS will probably disapprove your return.

fanfare
Level 15

Day Trader (with over max write off loss) + Day Job. Benefit to filing as Day Trader?

a Professional Trader makes money, does not lose money. You may wish to consider some other line of work.
JL5
New Member

Day Trader (with over max write off loss) + Day Job. Benefit to filing as Day Trader?

I trade everyday, and qualify as trader as per rules, which I stated above. I make money now, but did not last year, yet, irrelevant to question. Still hoping you have an actual answer.
fanfare
Level 15

Day Trader (with over max write off loss) + Day Job. Benefit to filing as Day Trader?

"Special rules apply if you're a trader in securities, in the business of buying and selling securities for your own account. The law considers this to be a business, even though a trader doesn't maintain an inventory and doesn't have customers"

There is no $3,000 loss limitation - you won't be reporting on Schedule D.
JL5
New Member

Day Trader (with over max write off loss) + Day Job. Benefit to filing as Day Trader?

you can only write off $3,000 (or something close) of losses per year. Anyway... nvm
jig
New Member

Day Trader (with over max write off loss) + Day Job. Benefit to filing as Day Trader?

Hello @JL5   I am in the exact situation and I was wondering did you get everything figured out.  If so, can you share how you filed your taxes to get the best result.

 

Thanks

 

SgtofMarines
Level 2

Day Trader (with over max write off loss) + Day Job. Benefit to filing as Day Trader?

I am in the same situation, those above who responded dont seem to understand our situation. I will keep researching too.

WendyN2
Level 7

Day Trader (with over max write off loss) + Day Job. Benefit to filing as Day Trader?

Yes, @SgtofMarines and @JL5, they are stock trades, however, there are certain rules to abide by as with anything related to taxes. Individual traders and investors pay taxes on capital gains. Generally speaking, if you held the position less than a year (365 days), that would be considered a short-term capital gain, which is taxed at the same rate as ordinary income.

 

Here are some links to "rules" of day trading, as well as tips and tricks of the trade, so to speak:


 

Day Trading Tax Deduction Tips

 

Tax Implications of Trading

 

Day Trading and Taxes

 

Then, 

Posted by an "Alumni" of TurboTax back in 2019   Intuit Best Answer For Day Trading

 

 

 

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