Taxes for newbie traders.

Quote from seasideheights:

I file differently than what I'm going to mention but I believe I'm correct for newbie stock traders.


If you daytrade full time with no other income, you can file form 1040, use Sched D for your trading gains, put your profession as "Trader of Securities", and if you want to avoid audit chances, don't claim any of your expenses. Your taxes would be composed of a filled out 1040 & a sched D. On the 1040 you would put 0 for the "Wages, Salaries & Tips" line on the form & put your profits on the "Capital Gains" line. You wouldn't owe self employment taxes.


Would those guidelines help newbie traders just starting out with stock trading? Or am I incorrect.

(Note: I'm not a tax attorney or giving advice, I'm just talking & I may be 100% wrong)

Am I right or wrong? Is what I mentioned correct?
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Why file as a trader in securities if you're not going to deduct expenses? Makes no sense.
 
Quote from midlifeguy:

If you do, you are most guaranteed an audit.
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What are you talking about? I've been doing it for nearly a decade. I would think most serious traders do this.
 
Ok I am doing a K1 for the first time and although a bit confusing using a w2 for years it doesn't seem that bad. I just filled out schedule D (1040) as instructed by my K1 but I have expenses I want to deduct too.

I used a couple of news services + i traded from a home office + my health insurance premiums were high too. I don't really understand that u get an automatic audit if you have those expenses but I'll deduct them anyways because I paid for them.

Now I just wanted to make sure that all those expenses (news services, home office, health insurance premium etc.) are going to be on Schedule C? Is that correct?

Thanks
 
Quote from ener555:

Ok I am doing a K1 for the first time and although a bit confusing using a w2 for years it doesn't seem that bad. I just filled out schedule D (1040) as instructed by my K1 but I have expenses I want to deduct too.

I used a couple of news services + i traded from a home office + my health insurance premiums were high too. I don't really understand that u get an automatic audit if you have those expenses but I'll deduct them anyways because I paid for them.

Now I just wanted to make sure that all those expenses (news services, home office, health insurance premium etc.) are going to be on Schedule C? Is that correct?

Thanks
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Seek out professional advice... i.e. CPA... for a couple of hundred dollars, It will be the best $200 you will ever spend...
 
Just figured it would be a simple question whether I deduct expenses such as home office, news services health insurance etc on schedule C or something else. I am sorry that one fairly simple question (hope its simple) isn't worth $200-$300 to me.

Thx
 
Quote from ener555:

I am sorry that one fairly simple question (hope its simple) isn't worth $200-$300 to me.

Thx
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If you don't value a CPA signing off over a potential audit, then your priorities are in the wrong place, the CPA fee is deductible off next year's taxes and he will probably save you a few more thousand off this year's.

I file some of my expenses on a schedule C, part V, and some others on Schedule A, but my accountant fills in the forms!

Good Luck,

surdo
 
Quote from ener555:

Just figured it would be a simple question whether I deduct expenses such as home office, news services health insurance etc on schedule C or something else. I am sorry that one fairly simple question (hope its simple) isn't worth $200-$300 to me.

Thx
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Chances are that those items you WANT to deduct are not qualified, very few items are. You may consider yourself a business, however, the IRS may not. A CPA will prevent you from serious mistakes and penalties. Simple question, simple answer.
 
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