Day trader taxes

[shahzadb]

Anyone here does taxes for day trader person?

someone who trades stocks daily

 

[Just Blue]

What state?
I tagged TM, who is a site vetted tax attorney.

@Taxing Matters

 

[FlyingRon]

I'm sure there is, but the few lawyers present here aren't trolling for customers.

Did you have specific question? Day trading doesn't give you any special tax treatment (other than it's unlikely you qualify for long term capital gains treatment). If you qualify as a trader (one who is in the business of such), then there are a few tax rules that you can avail yoruself of likebeing exempt from the wash rules, etc...

 

[quincy]

Here is a link to another tax question posted by Shahzadb:

https://forum.freeadvice.com/threads/llc-in-2021-for-2020-expenses.660545/

 

[Taxing Matters]

Anyone here does taxes for day trader person?

Look for tax professionals in your area that are familiar with the rules for traders of securities (as opposed to investors). You may need to call a few and ask them their experience with stock traders.

Note that simply trading stocks daily does not automatically make you a trader rather than investor. The details of the activity matter. See IRS Topic 429 for the description of investors, dealers, and traders.

Day trading doesn't give you any special tax treatment...

Actually, if you qualify as a trader, it does as it allows you the option to elect mark to market treatment, something that investors cannot do.

 

[FlyingRon]

Actually, if you qualify as a trader, it does as it allows you the option to elect mark to market treatment, something that investors cannot do.

Did you bother to read my entire post, or are you just in a snippy mood. You quoted a subset of my post to make the same statement that the second sentence of my paragraph did.

Oh, but I'm not a lawyer. I'm just an investor and financial arbitrator.

 

[adjusterjack]

Did you bother to read my entire post, or are you just in a snippy mood. You quoted a subset of my post to make the same statement that the second sentence of my paragraph did.

Oh, but I'm not a lawyer. I'm just an investor and financial arbitrator.

I'm not a lawyer, not an investor and not a financial arbitrator. Wash rules are how much detergent and bleach I put in my laundry and I wouldn't know mark to market from Marky Maypo.

To me, and maybe to the OP, TM wrote something completely different from what you wrote.

Maybe it's you who are in a mood?

 

[Taxing Matters]

Did you bother to read my entire post, or are you just in a snippy mood. You quoted a subset of my post to make the same statement that the second sentence of my paragraph did.

Oh, but I'm not a lawyer. I'm just an investor and financial arbitrator.

What is up with YOUR mood? Yes I read your entire post. I don't agree that what I said was a subset of your second paragraph, but assuming it was, then your second paragraph, IMO, is contrary to what you wrote in your first paragraph.

 

[FlyingRon]

TM hasn't refuted the incorrect contradiction of my statement that "day trading doesn't give you any special tax treatmemt. The statement I made was true. Calling yourself a "day trader" or even having an LLC (from the other thread) doesn't make you eligible for the trader rules.

The wash rule is an example of one that doesn't apply to recognized (day or other) traders. The wash rule says you can't sell to realize a loss and then repurchase the same investment (the IRS is not concerned with you washing gains on the other hand).

TM's partial quote was incorrect and condescending.

 

[Taxing Matters]

TM's partial quote was incorrect and condescending.

And exactly how was my partial quote "incorrect and condescending? You made the statement that being a day trader "doesn't give you any special tax treatment (other than it's unlikely you qualify for long term capital gains treatment)." I simply responded that "Actually, if you qualify as a trader, it does as it allows you the option to elect mark to market treatment, something that investors cannot do." I said that because, IMO, being able to elect mark to market is indeed something special - it can significantly change the timing and computation of your gains and losses. Now, what exactly did I say that was incorrect? Do you disagree about my statement that traders can elect mark to market? Because that is the only FACTUAL thing I said, and thus the only thing that could be incorrect.

As far as condescending goes, I don't see it and certainly didn't intend it. What about my statement do you think was condescending? Nothing I said attacked you or stated that anything you said was factually wrong. I simply expressed my view that mark to market is indeed something special for traders. So how to do you get condescending out of that?

I suggest that you perhaps read into my statement something that wasn't there and took offense where none was intended. You said:

Oh, but I'm not a lawyer. I'm just an investor and financial arbitrator.

I think that snarky comment was uncalled for. I did not attack you or your knowledge, or suggest that being a lawyer necessarily makes me any better or more knowledgeable than you. So where that is coming from, I don't know. Perhaps if you had slept in your own bed last night instead sleeping at a Holiday Inn Express you might not have reacted the same way?

 

[LdiJ]

Ok, here is my take on this: Both FlyingRon and Taxingmatters mention that qualifying as a trader gives you some special tax rules. Each of them mentioned a different example, so I think that they were saying substantially the same thing.

However, I don't think that TM was condescending at all.

 

[davew9128]

I'll just say that WHAT is being traded is equally as important as whether or not the activity falls into trader vs investor status. I would not blindly make a MTM election simply because there is sufficient activity to be a trader.

 

[Taxing Matters]

I'll just say that WHAT is being traded is equally as important as whether or not the activity falls into trader vs investor status. I would not blindly make a MTM election simply because there is sufficient activity to be a trader.

I agree. Just because one might be eligible to make the election doesn't necessarily mean that it's a good choice. The individual circumstances of the trader involved matter in making that decision.