Do I qualify for a day trader?
HI,
I have been day trading in 2009 for 3 months;
I used 5 different brokerage accounts and bought and sold many securities all day long;
The avergage amount of trades I made every day is about 7-10 trades;
Now I need to know if I qualify to be a day trader and be able to deduct the losses on a schedule C;
Does this 3 months in 2009 of full day trading qualify me as a day trader?
pls advice
Several issues here.
To be a day trader under SEC rules you need to have a margin account with at least 25000 in it. Number of actual trades is not important.
As far as taxes…
There is no distinction for "day trader". You can be a professional "trader in securities" but that doesn’t matter how frequently you trade.
Gains and losses are on Schedule D for everybody.
What schedule C is for is expenses. A person who is not a professional trader has to deduct expenses like data services and publications on Schedule A as unreimbursed business expenses subject to a 2% floor, which usually means they can’t be deducted. A professional can file Schedule C for self employed people and take every dollar of expenses.
What make you a professional trader is how much time you spend working on your trading as opposed to other work, and what kind of other income you have. If you have a regular job and you shoot off a few trades during the day on you internet connection from work or your smart phone, that doesn’t make you a professional no matter how many trades you make. Your profession is your day job that take most of your working hows and pays you a salary or wages. Details from the IRS below.
March 16th, 2010 at 2:50 pm
It appears by the volume and frequency of your trading that you may qualify as a day trader.
The biggest question to ask though (and this is what the IRS will ask), is have you ever traded after sundown? If so, you might be classified as a night trader.
References :
March 16th, 2010 at 3:40 pm
no
References :
March 16th, 2010 at 4:25 pm
Several issues here.
To be a day trader under SEC rules you need to have a margin account with at least 25000 in it. Number of actual trades is not important.
As far as taxes…
There is no distinction for "day trader". You can be a professional "trader in securities" but that doesn’t matter how frequently you trade.
Gains and losses are on Schedule D for everybody.
What schedule C is for is expenses. A person who is not a professional trader has to deduct expenses like data services and publications on Schedule A as unreimbursed business expenses subject to a 2% floor, which usually means they can’t be deducted. A professional can file Schedule C for self employed people and take every dollar of expenses.
What make you a professional trader is how much time you spend working on your trading as opposed to other work, and what kind of other income you have. If you have a regular job and you shoot off a few trades during the day on you internet connection from work or your smart phone, that doesn’t make you a professional no matter how many trades you make. Your profession is your day job that take most of your working hows and pays you a salary or wages. Details from the IRS below.
References :
I am an IRS approved professional trader in securities.
http://www.irs.gov/taxtopics/tc429.html