This video goes through a couple of the things you should know about being and day trader for your taxes and how it works in the U.S. other countries and taxes may vary. It is recommended you always talk to your account about any questions you may have and what you can and can’t do when it comes to your taxes.

Day Trader taxes (self-employed)

  • You can only claim $3000 losses per year as net capital losses.
  • You can deduct margin account interest.
  • You can write off your computer, internet, telephone, and office supplies. All that pertains to being a trader. (Always consult a professional beforehand)

Mark to Market trader (if you qualify)

Definition: you treat a trading position as closed at year-end and account for gains or losses based on the market value. The cost is adjusted to the market value when the position is later sold or covered.

Qualifications needed: you must seek to profit from daily market movements in the prices of securities and not from dividends, interest, or capital appreciation. In addition, your activity must be substantial. Finally, you must carry on the activity with continuity and regularity.

  • Mark to market trader is exempt from all wash sales.
  • Patrick Wieland explains how it works on the link to follow 3:43
  • Mark to market trader Allows you to deduct an unlimited number of losses.

You have two types of investment

  1. Long term, you hold more than a year = long-term tax rate 20%.
  2. Short term you hold for less than a year = regular tax rate 39.6%.

Patrick Wieland talks about putting your money into an IRA account and how it works in (U.S.) check the link to follow to get the key points 6:49.

These are some good tips to know if you are starting, but I recommend you always talk to a professional about any questions you may have about your taxes. Hence, you get a better idea of where you stand with the amount of activity you generate in the markets. I hope this video helped answer some of your questions on taxes, and on that note, happy trading, fellow investors.