Filing taxes as a retail trader

your broker sends the taxman your p/l statement for the year. so the details of your trades are not necessary.

it's just like your employment earnings.

you don't need the hours etc.

 

all you need to send the taxman is your p/l statement. bottomline.

the brokers send a copy to the taxman. so it's impossible to cheat on not paying your taxes if you made big profits.

 

I thought that the form the broker sends to the IRS only has the total sale amounts, and not the total buy amounts. Could be wrong about that. And the IRS might want to know about wash sales and also short term vs long term trades.

 

The broker sends a 1099B which only reports your sales, it's up to you to provide the IRS with the purchase/sale on the schedule D. If you don't file, The IRS assumes a zero cost basis and sends you a bill for tax on your total sales for the year.

Hasn't anybody on this site ever filed a return, I guess not?

 

many clearing houses like penson show what your total gross buys were and total gross sells were on your yearly 1099. IF YOU HELD NO POSITIONS INTO THE NEW YEAR THATS YOUR PROFIT. all can say this or that but thats your profit. its all the irs cares about. they don't want to see 100k pages from a hyperactive trader

 

the taxman knows your profit and loss for the year. if you owe they want the tax. you can't cheat them on this.

 

The IRS has a total number reported to them of your GROSS proceeds, that is ALL they get, one number on a 1099b for each account.

It is your job as the taxpayer, to reconcile your return on the schedule D, to the number reported to the IRS by your broker.

I will give you the phone number of an agent, a friendly one with very perky tatas matter of fact if you like to have it explained in plain ENGLISH.

 

taxman has red flags and if they do an AUDIT they have access to everything from your broker.

 

Ok, here's my yearly tax time post about the FairTax. NONE OF THIS would even be necessary, if congress would do the right thing and bring us the FairTax. Please contact your congressman and insist on having it. I'm done.

 

The tax rule is that you are supposed to show every trade. If you don't want to, then don't, but those passing out advice on here that you don't have to.... they don't know what they are talking about.