Yes. You still need to pay the IRS taxes if your money is still with your broker after you sold the stock. As long as you sold the stock, then you have to pay the IRS if realized a profit.
Section 1256 contracts are reported on Form 6781 first, then report these numbers on Schedule D. The 6781 establishes the 60/40 Long Term/Short Term Capital Gain or Loss. Jack
Can some one share a sample of "FILLED" 6781, say with 2 sample entry of some futures contract? I am also filing return first time and stuck how to show futures contract entry on 6781.
You should have a 1099 from your broker(s). Block 8 will have your net profit or loss for the year. Block 9 should be empty. If it is not, read the tiny print on the 1099 form for box 9 info. Enter the Broker's name on line 1 in box (a). If you made money enter the gain in box (c) on line 1. (1099 Box 8 is a positive amount). If you lost money enter that amount in box (b) for line 1 (1099 Box 8 is a negative amount). You will only have two entries on line 1 - the broker name and either a gain or a loss. You cannot have both as futures contracts are netted out by your broker and the amount in box 8 of your 1099 is your net including commissions for the year. Follow the instructions on the 6781 form for the rest. Futures reporting for tax purposes is much easier than stocks. You do not need to list each trade. Jack
I just filed my taxes again, and I'm a day trader who does hundreds of trades per year. I use H&R Block b/c it's only about $180 to have my taxes prepared. I've never had problems with the IRS, and I've been doing my daytrade taxes since 2000. Bottom line, you don't have to go nuts with paperwork. You just need to enter your proceeds and you realized gain/loss. It's pretty simple. Just be sure to keep a copy of your 1099 from your broker that details each and every trade you made during the year. Not a big deal -- your broker should provide you that thick 1099 document (50 pages or more if you're a daytrader like me) for free just before tax season. I've only had one glitch in the past 7 years of daytrading taxes, and it was caused by my broker who forgot to list some trades that I had made on my 1099 form. When the IRS sent me a bill fo $17,000 in back taxes and penalties, I freaked out. But H&R Block helped me resolve the problem, and we got the corrected 1099 form from my internet broker. And H&R block didn't charge me anything extra. Pretty sweet deal. To me, it's worth the $180 a year to have an account from H&R do my tax forms with me. They have done right by me so far. I've thought of saving $150 by using TurboTax by myself, but then I always think -- what if I get audited? At least I can say an accountant with H&R Block helped me prepare the taxes if I get audited, so the IRS is less likely to think I'm trying to scam the Feds out of their money. --Scalpo
Bad advice. Here's a link to the instructions for Schedule D: http://www.irs.gov/pub/irs-pdf/i1040sd.pdf I'd take a look at page D6. It specifically says to not do what you're doing. You might ask HR Block what part of the instructions to Schedule D he did not understand. Either way, the IRS doesn't care whether HR Block filled your return out...you're still responsible. Maybe you'll luck out and they'll miss it. But it's one thing to play IRS roulette on your own, it's another to advise others to do the same. Take a look at "Range's" post on the prior page, he prints out what the IRS phamplet says on page D6. OldTrader
I wanted to start a new thread to ask this question but now that a thread has started on Tax I'll just ask here. I have a few trading accounts with different brokers, one of the annoying ones is Ameritrade, they sent me the 1099 form and a list of the transactions, missing the year before's (2005) buys and resulting in a net profit of over 30K. I have another account with IB, I really like their work it's more professional, not happy with everything but it's better than many brokers, I get to download the complete list of transactions listed in the Schedule D-1 form as a PDF file. My question is; Can I prepare a Schedule D-1 form for list of transactions made through Ameritrade, print and then attach it to the Schedule D-1 form I got from IB and in the end calculate the net gain loss from all brokers and enter it in the Schedule D (I believe box# 7) and send that to the IRS? Or do I have to refill the Schedule D-1 with all transactions made through all brokers? Also is there a chance that IRS might not trust the list I send them and claim that Ameritrade has reported a net profit of over 30K?
Thanks for the advice Old Trader, but I politely disagree. I've had several accountants over the years and they've all advised me the same way. Here's the part of Schedule D that allows me to do things a little differently (and more simply) than you have suggested: page D6 SPECIFIC INSTRUCTIONS Lines 1 and 8 You must enter the details of each transaction on a separate line of Schedule D. If you have more than five transactions to report on line 1 or line 8, you can report the additional transactions on Schedule D-1. Instead of reporting your transactions on Schedules D and D-1, you can report them on an attached statement containing all the same information as schedules D and D-1 and in a similar format. *** So, from what my last 4 tax preparers have told me, that last line is crucial. It says you don't have to report them on Schedules D and D-1, you can "report them on an attached statement containing all the same information as Schedules D and D-1 and in a similar format." All I do each year is make sure to keep copies of my 1099b forms, and I print out an Excel spreadsheet of my account history available from my broker (which satifies the "similar format" showing buys, sells, commissions, SEC fees, etc). It's that simple. The important thing is to keep a copy for yourself. I just leave a copy on file with my accountant, and keep a copy for myself at home. If the IRS wants to audit me, they can. They will simply see a mound of paperwork that accurately reflects my trading for the year, and they can spend the hours crunching the numbers if they want. My suggestion to someone new at figuring out daytrading taxes -- don't try to do it by yourself. Get advice from several professional tax consultants. Don't rely on one opinion, and definitely don't take advice from me or anyone else here. Pay the extra $200 to $400 a year to get the services of a pro. If your daytrading doesn't net you the type of profits that make hiring an accountant realistic, then maybe daytrading isn't for you. Just my two cents. And again, Old Trader, I respectfully disagree with you. Maybe I'm on my way to Federal prison from playing "IRS roulette" as you call it. But if I end up in prison, I'm taking at least 4 accountants with me! --Scalpo