Okay I'm new to daytrading this year, Have not made any money,daytrading is my full time job, what if any of my losses can i deduct? Im down close to 15k. Help! Thank you in advance!
you can deduct 3000 per year against any other income unless you are a mark to market trader. if you are mark to market there are some other options.
I have a better tax question: If I made HKD 10000 in lots of little HSI trades during the course of the year, how does that go onto my tax return? Do I have to or should I convert the gains into USD before year end?
Thanks for the reply, did i need to file to be a m to m this year, or can i do it on this years return? Also say I was m to m what could I deduct? Thanks again!
you need to file by april 15th. if you were mtm you could possibly go back and recover some of the money you paid in taxes in 2 prior years through a nol. you would probably need professional tax help for that but if you paid a lot of taxes in prior years it could be worth it.
If you do not file for Mark to Market, you can deduct 3,000 this year, and each year for the next four years, as a capital loss carryover. 3,000 is the max you can deduct for each year, no matter what your total losses.
My advice - is speak to someone who is a tax adviser or research this on the Internet. You state that you are new to trading but don't give any details as to what it is you trade (ie. eMinis, Stocks). The short answer is $3000 definitely, need more details to know if you will be able to deduct more and when. But go talk to a pro/ research - if you choose to go MM there are implications as well. Good Luck if you're still trading - use better risk management and hopefully you will end the year without the need to answer this problem.
I think that an individual can carry a capital loss forward indefinitely subject to the constraint that the maximum that can be deducted against ordinary income is usually $3,000 in any given year. Given that the loss is $15,000, it will be used up by the end of the fifth year as the quote above indicates. There is no limit, by the way, on the amount of capital loss that can be used against capital gains in this year or in future years. As a result, the loss might be used more quickly. MSS