Tax reporting for day trades - order by order or in aggregate?

[Kaga]

Perhaps a seasoned day trader among you, who reported taxes on the day trading proceeds in the past can answer this question:

When your CPA prepared your tax return, was each individual trade reported separately, or in aggregate in case when several trades where taken on the same ticker during one day? (In aggregate, as in simply total sales amount and total purchase amount on the day.)

Asking, since some strategies may require several dozen entries and exits during a single trading session, and reporting each entry and exit separately seems kind of insane. Which one is it?

 

[xandman]

For stocks, it is a freaking nightmare. And your tax preparer, may charge you a buck per line entry on Sched D.

Although, you can simply upload a form 8949 from your broker(s) into tax software to create your Schedule D. Then, enter that net figure in a single line of your 1040. I still hate the dozens of pages created. A day trader can have hundreds.

https://www.hrblock.com/tax-center/income/investments/reporting-multiple-stock-trades-on-schedule-d/

Like always, talk to your CPA.

 

[Metamega]

For stocks, it is a freaking nightmare. And your tax preparer, may charge you a buck per line entry on Sched D.

Although, you can simply upload a form 8949 from your broker(s) into tax software to create your Schedule D. Then, enter that net figure in a single line of your 1040. I still hate the dozens of pages created. A day trader can have hundreds.

https://www.hrblock.com/tax-center/income/investments/reporting-multiple-stock-trades-on-schedule-d/

Like always, talk to your CPA.

Wouldnt it be awesome if you could just say “ I had this much money at beginning of year, and had this much at end of year”.

 

[birdman]

If you trades funds in an IRA, you don't have to bother until you take funds out of the account.

 

[xandman]

Wouldnt it be awesome if you could just say “ I had this much money at beginning of year, and had this much at end of year”.

Futures and Forex are a single, end-of-year profit/loss entry.

 

[xandman]

Perhaps a seasoned day trader among you, who reported taxes on the day trading proceeds in the past can answer this question:

When your CPA prepared your tax return, was each individual trade reported separately, or in aggregate in case when several trades where taken on the same ticker during one day? (In aggregate, as in simply total sales amount and total purchase amount on the day.)

Asking, since some strategies may require several dozen entries and exits during a single trading session, and reporting each entry and exit separately seems kind of insane. Which one is it?

Here is some additional perspective.

Ex. We trade one TSLA 1600-1605 bull call spread for less than $500.

We bought a call with 160,000 notional value (plus option value and commission) which adds up to our "Cost of Purchase" and sold a call with 160,500 notional value (less option value and commission) which adds up to our "Cost of Sale". What if the short call is missing from the 8949 download? Then, we need a manual edit. Otherwise, to the Schedule D that Cost of Purchase will net as all profit.

You have to be on top of each trade. And, make sure the CPA/software accounts for all the legs in your combos.

 

[vanzandt]

Perhaps a seasoned day trader among you, who reported taxes on the day trading proceeds in the past can answer this question:

When your CPA prepared your tax return, was each individual trade reported separately, or in aggregate in case when several trades where taken on the same ticker during one day? (In aggregate, as in simply total sales amount and total purchase amount on the day.)

Asking, since some strategies may require several dozen entries and exits during a single trading session, and reporting each entry and exit separately seems kind of insane. Which one is it?

Who's your broker?
Your accountant should be able to upload them all from your broker into his/her software. If you don't want to give him your passwords, ask him what type of file he needs it in and then just upload it yourself to a thumb and give that to the accountant.

EDIT: and to what Xandman was saying... imo you don't really need an accountant anymore unless your stuff is super complicated in other areas because trading-wise TurboTax Premier figures all that stuff out for ya. Wash sales too. Even Bitoin and other cryptos. Everything. And they can do a direct upload from every broker or bank there is. It cost's $100.
https://turbotax.intuit.com/personal-taxes/cd-download/premier.jsp

EDIT... see if your broker is on this list. I'm sure they are.
https://www.intuit.com/partners/fin...ces/tax-import/program-overview/partner-list/
Click on the 1098-1099 selection at the top of that list of W-2 partners.

 

[Kaga]

Thanks guys for the suggestions! Yes, my broker IB connects directly to TurboTax and prepares all the filing automatically. What I am more concerned about, is that at the end of the year it may generate a tax report that consists of 1000 or more pages! Would that raise some red flags at the IRS?

By the way, I read on this forum that some of you file trading taxes every quarter. But IB only generates the tax files once a year for me, should I be worried about only filing once a year?

 

[vanzandt]

Thanks guys for the suggestions! Yes, my broker IB connects directly to TurboTax and prepares all the filing automatically. What I am more concerned about, is that at the end of the year it may generate a tax report that consists of 1000 or more pages! Would that raise some red flags at the IRS?

By the way, I read on this forum that some of you file trading taxes every quarter. But IB only generates the tax files once a year for me, should I be worried about only filing once a year?

Yeah the 1000 pages... that's why you file electronically. And good lord no, it doesn't raise any red flags lol. Its all summed up at the bottom of the 8949 anyway so its no big deal. They see 1000's and 1000's of these.

"The IRS partners with companies that offer Form 8949 software that can import trades from many brokerage firms and accounting software that can help you keep track of your adjusted basis in securities. To find out more, go to IRS.gov/Efile."
https://www.irs.gov/instructions/i8949

And yes, if you're making a lot, you should just keep a record and pre-pay quarterly. Its a good place to be. Just guestimate it at your effective rate if you have a day job. If you lose next quarter, TurboTax will figure that out for you. It spoon-feeds you. It asks if you made any quarterly payments etc. Its pretty painless really.