Learning Day Trading

Swing Trading and Just Turned 18?

I just turned 18 and im doing swing trading and making some profit on stocks, but never hold a stock more than a week I probably wont be making more than $5,000 of profit this year and im single so what is my tax rate? When do I file for taxes? and what can I deduct? and IF i end up in loss for the year do I have to file because it is my only way of making money

Public Comments

1. Your tax rate depends on your total income for the year among other factors. Your trading profits will be taxed as short-term capital gains.
2. As an "Investor" you get to list each trade *individually* on your taxes. Each trade will stand on it's own, gain or loss, then you total them. If you are to lazy to do this, keep in mind that the IRS does not guess at the gain and they will use $0 as your cost basis. Your brokerage will probably give you a way to download the information into a spreadsheet--which, thankfully, the IRS will let you submit instead of a 1040 schedul D-1. As for expenses, those go on schedule A as an itemized expense--you only benefit from itemizing if you total is more than $5700. (That's the amount of the standard deduction you would have gotten anyway.)
3. Dear The Best: Congrats on an early start to trading. First go to www.irs.gov and read "Tax Topic 429" about day traders. They have special rules if you qualify. Also goggle day traders and read a lot. Normal trading is reported on Sch D and if you only make $5000 you may not have to file although if your 1099-B shows lot of activity, that alone may require you to file. Sch D is your reporting form and you will have mostly short term losses/gains (less than one year). Your expenses can be reported differently if you qualify as a day trader. (not the normal Sch A) This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more. Errol Quinn Enrolled Agent Master Tax Advisor