Safest way to file taxes for full time daytrader

Discussion in 'Taxes and Accounting' started by jackpearson, Nov 16, 2006.

  1. I'm considering quitting my job & going full time into daytrading. Up until now, I've put my trades on a Sched D as part of my 1040.
    Can I still do that if I quit my job & do daytrading as my only source of income? Can I put all my trades on Sched D & list my wages for the year on the 1040 form to be $0 on the line that asks for your wage info for the year? Also, what should I put down as my profession on the last line of the 1040 right below where you sign your name? Lastly, is filing mark to market advantagous? I've been reading that there's lots of questions by the IRS if you file that way. It's any possible questions is what I'm trying to accomplish. I'll pay more than necessary to ensure I pay my fair share & don't do anything without realizing it that could get me in trouble.

    (I don't mind not writing off all my trading expenses. I'll pay that with after tax money. I'm also not looking to right off a home office. I want to file the safest possible way to avoid the hassles of any audit.)
  2. It is actually a Schedule C. You can deduct all your business expenses against your profits.
  3. Forgot about mark to market. MTM is only valid if you have a big inventory of outstanding stocks at the end of the year. If it is only a matter of a few bucks of profit or loss left, no big deal, you will be taxed the year after. Only "good" if you have siginificant unrealized losses. I hope you won't need it !