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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?
6 Replies
Level 14

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.

Level 14

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.
Level 14

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
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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