Day Trading Taxes
Basically you pay the government 25% of Profit
 "The hardest thing in the world to understand
is income tax." Albert Einstein
If you live up to the government's perception of a day trader you will be eligible to deduct your margin account interest on Schedule C and probably take an immediate write off of up to $250,000 for equipment used in your trading activities more than 50% of the time such as office related stuff computer, big screen TV if you use if for trading. This comes under the Section 179 write off.
You must use the space like an office regularly working in it exclusively for trading. The deduction should not throw you into a net loss position. You don't have to pay self-employment tax on your net profit, because capital gains are exempted. Lot's of incentive.
How To File Day Trading Taxes
If you have been day trading just a little you will find that you have done many transactions. Far too many to enter in manually so here is what you do.
How To Use Turbo Tax to file Day Traders Profit and Loss?
Turbo Tax and other profit and loss software's often don't have the capability to handle proper filing of multiple trades (Hundreds often Thousands).
Create a Worksheet to Attach to your Taxes!
1. Download all your trades onto Schedule D so that your gain or loss is calculated. You will need a record of the date acquired, date sold, cost, sales and profit or loss.
2. Now input your gain or loss on line 1 of Schedule C in the worksheet file. Enter everything, including all your expenses.
3. Manually enter your total (gain or loss) from line 32 of the worksheet Schedule C onto line 21 (other income) of Form 1040 in order to categorize your income to the ordinary tax rates.
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