How Do You Do Your Tax Return, Being An Active Trader?

Lagg-Alot said: "Hi Guys and Gals. I have been away for this site for a while but have a question that only other traders can answer. What is the best way to handle my tax return? That is the simple question and I hope it generates some feedback. In addition I have been educating myself on the Tax Laws and if I Claim Traders Status (which I do think I quilify for). Trading becomes my Personal Business to which I can deduct all of my trading loses from my adjusted gross income (like a business does) as oppossed to just deducting the Max of $3000 a year for the rest of my life. There are a couple of CPA's that can do this for me but I have not located one in my home state that is New York. There is [COLOR="Blue"] [URL="http://www.daytradertax.com"]http://www.daytradertax.com[/URL][/COLOR] but sending my personal information in the mail to someone far away is not high on my list of smart things to do. So maybe there is a chance that someone here at the forums can recommend to me a professional in the New York area that handles Trader Tax Status. Well I know it is worth a shot. Thank You for your time."

Lagg-Alot said: "Now I remember why I stayed away from this site for so long. 11 noisy viewers who don't have nothing to add. Or maybe they don't plan on filing a tax return this year. It is a forums right? Why do I bother? :flipoff:"

Raharu Haruha said: "[QUOTE=Lagg-Alot;63416]Now I remember why I stayed away from this site for so long. 11 noisy viewers who don't have nothing to add. Or maybe they don't plan on filing a tax return this year. It is a forums right? Why do I bother? :flipoff:[/QUOTE]actually it's singular. just "forum". No clue, and I'd liek to know myself"

LongArm said: "[QUOTE=Lagg-Alot;63416]Now I remember why I stayed away from this site for so long. 11 noisy viewers who don't have nothing to add. Or maybe they don't plan on filing a tax return this year. It is a forums right? Why do I bother? :flipoff:[/QUOTE] Sheesh, Lag, I would bet that most members of this forum--including the few members or non-members who checked out your post in the few wee morning hours since you posted--do not use trader tax status and would not know much about it. Patience is your friend. First of all, you may think you qualify for trader tax status (and maybe you do), but the IRS is fairly particular about that. Basically, trading should be your primary means of providing income for yourself, and you should be trading often and regularly (i.e. every day) before considering claiming trader status. Second, claiming trader status alone is NOT enough to do away with the $3000 per year tax loss limit. To do that, you also need to elect mark-to-market accounting (you can't elect MTM without first qualifying for trader status). Trader status just allows you to claim more deductions and deduct all margin interest, etc. Third, MTM accounting should be carefully considered before doing--because once you have MTM, you're basically stuck with it for future years (unless the IRS is nice and cuts you a break). Fourth, even if you think you qualify for trader status and you decide you want to go with MTM accounting, it's too late to elect MTM accounting for 2007, meaning you still are limited to the $3000 net loss limit for last year. For the 2007 tax year, you would have to elect MTM before April 15, 2007. My advice? Unless you're sure you qualify for trader tax status, don't take the higher risk of audit that comes along with using it. And even if you do use trader status, don't elect MTM accounting unless you're sure trading will be your "job" for a long time to come. Instead, just carry over your excess losses as all [I]investors[/I] do. It's not easy finding CPAs who are up on trader's tax laws. If you decide you want to pursue this, and you can't find someone in your area, you might have to go with an online company such as traderstatus.com or greencompany.com. These two have been around for a while, so they're probably not crooks. ;)"

Lagg-Alot said: "Acually I have made a lot of daytrades i think about 4000 last year. The only thing I may have a problem with is I also have a JOB at which I work at nights. It is a very good job with pension and benifits. But trading brings in a lot more money. I wonder if I can still keep my job and claim MTM Trader status. Well at least I am making an effort to learn about it. if not this year maybe next."

LongArm said: "[QUOTE=Lagg-Alot;63492]Acually I have made a lot of daytrades i think about 4000 last year. The only thing I may have a problem with is I also have a JOB at which I work at nights. It is a very good job with pension and benifits. But trading brings in a lot more money.[/quote] If you're making good money trading, why the big concern over the $3000 loss limit? Just curious. [quote]I wonder if I can still keep my job and claim MTM Trader status.[/QUOTE] My understanding is that it's possible, but more difficult, to have a job on the side and still claim trader status. If it's a full-time job, that might be tough."