I am a day trader. How, exactly, do I report my investment income ($50,000 in losses, actually) into TurboTax, so that I can capitalize on the full range of deductions?
I have used TurboTax for at least 10-20 years and it has been great. But now that I am a day trader who has suffered significant losses day trading, TurboTax seems to be failing me. Usually I just answer its questions and TurboTax leads me to the right answers, but not, apparently, when it comes to day trading. I need to know how, exactly, to enter my investment income into TurboTax so that it gets included as a business expense and is fully deductible.
I read elsewhere, in a separate TurboTax Forum, that I should report my trading gains and losses on Schedule D, just as I would if I were filing as an investor. My losses from the Schedule D then should be included on my Schedule C before transferring over to Line 12 of Form 1040. But what is not clear to me is whether Turbo Tax will make all of these connections. I am concerned that it will not. I am not used to doing things manually on TurboTax. Instead, I am used to simply answering its questions and being led to the right answers. Will that happen here? Or do I have to do things manually?
Also, as mentioned, I lost about $50,000 last year day trading, and my tax liability from other (non-day-trading) income is far less than $50,000. So does any of this $50,000 that I can't deduct in 2014 carry over to future years? And will TurboTax ensure that it carries over? Or do I have to do things manually because my situation is unusual or uncommon?
4 comments
Mark, you sound like you're in way over your head. $50,000 in losses in a single year is a lot for anyone, especially an individual trading what I assume is your own capital. Frankly, trading your own money without doing much research into what your capital gains/losses would end up costing you come tax time was a terrible idea. I'd recommend you do some paper trading for about a year and read some serious books on price action. I'll never understand why prospective traders start out by using their own money, which should not even be attempted until you can complete a minimum of 100 trades with paper money and have the dollar value of your profits outweigh the dollar value of your losses 60-40 at the conclusion of those trades. What are you even doing trading, man? Get a real education on trading, and get a real accountant, until then stop trading real money. At your pace, you may as well use $100 bills as kindleing for your weekend babeques.
$50,000 may be a lot to Johnny Acre, but not to Mark (or to me.) It might just be a part of the learning process and that might be a very small portion of his risk capital. In consultancy costs (to a company like MTI or OTA), office buildout, high speed internet and computer equipment your startup expenses could easily top $50,000 before you place your first live trade.
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