Tax Day: What Traders Need To Know

Like it or not, we all have to pay taxes.

That alone can be stressful, but day traders have much more to consider than the average person. If you’re a trader, you don’t get to just enter your W-2 into some tax software, sit back, and wait for the results.

There’s way more at play when filing your taxes as a day trader. You probably already know that you have to pay taxes on your trading income, but what are the details? What deductions can you make, if any?

Don’t worry: I’m going to cover all that stuff. Day trading taxes don’t need to be difficult. It’s just like anything else … You have to familiarize yourself with the process. It’s all part of your trading education.

But before we get to the nitty-gritty, my lawyers would have my head if I didn’t say this first: This communication doesn’t establish a professional relationship for accountancy, tax advice, legal or any other professional service.

Any information presented in our communication with you (including, but not limited to, website content, social media content, video content, printed material, audio content, emails, or any other content) regarding any issues should not be construed as advice as it pertains to tax matters, legal matters, or any other matters.

Always consult the advice of a professional licensed in your state or jurisdiction before making decisions on tax or legal matters.

OK, that’s out of the way now, so let’s do this!

There are a few basic terms you need to know off the bat. You’ll probably see these when you’re filing your taxes, so you should understand what they mean.

Capital Gains

If you made any money this year from buying and selling securities — which you hopefully have — then those profits are your capital gains.

Capital gains are taxable income and you have to report it as such. Pretty simple.

Capital Losses

I think you can probably figure this one out. Capital losses are the opposite of capital gains.

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