When do day traders pay the tax and how to do it ?

Discussion in 'Taxes and Accounting' started by etrades, Aug 21, 2019.

  1. etrades


    Hi guys,

    If one makes a profit in day trading - when to pay the tax - is it when filing taxes or at other schedule such as every month or week or something like that ?

    Also, do you go to an accountant do it or on your own you do ?
  2. tommcginnis


    Step 1: be profitable.

    trader99 likes this.
  3. You're supposed to make a good estimate of the tax you will owe. Payments are quarterly. Just mail in the 1040-ES with your check.
    etrades likes this.
  4. etrades


    Thank you Scataphagos.

    The estimate would be based on the actual P/L or is it estimated tax on estimated P/L ?
  5. Would be on trades you've closed out. You can't realistically estimate your P/L because you don't know when you are going to close out profitable trades (by year-end? Next year?). Of course if you're going to close out losers before year-end to offset gains, you should include those losses in your calculations.
    etrades likes this.
  6. smramzi


    Might be a redundant/annoying question but here goes:
    considering the "investment manager/llc member" is filing/reporting & paying based off p/l on "closed trades" for the quarter... do the investors have to file for these when they do their year-end taxes????.

    much appreciated!!
  7. tomorton


    Sorry guys, I can't resist - as a UK trader using spreadbetting to trade markets I never have and never will have to pay taxes on my gains. No matter how large. Don't even have to submit a tax return.
    SteveH and tommcginnis like this.
  8. wrbtrader


    Call your government tax phone number...file your tax every year regardless if you're profitable or losing money. Countries have a deadline to file your tax but others have a different date (soon after the filing deadline) to actually pay if you owe tax on your income.

    Notice the above in bold letters...you have to file your tax and get a good tax accountant to help you the first few years for you to determine if you can file on your own or if you'll continue to need your tax accountant to do it for you.

    I love it when people give out tax advice and they don't even know what country you're talking about. I think they assume the U.S. because you're writing your question in English. :D

    Yet, if you own a business or your trading is your business and you're consistently profitable...you can setup quarterly payment arrangements to avoid a big tax bill by your countries yearly deadline.

    Some countries has a deadline for filing tax for individuals and a different deadline for filing tax for businesses while other countries has one date for all. The latter is important because usually a consistently profitable trader will most likely treat his/her trading as a business to take advantage of things that an individual can not do.

    If you have a job (you work for someone) and you're a profitable trader too...get a tax accountant and/or call your government tax agency. Some countries offer free help by appointment only in person.

    Last edited: Sep 3, 2019
    tommcginnis likes this.
  9. Regarding gains/losses in the LLC... those won't be reported until after year end. The LLC manager will not be paying quarterly estimates on behalf of the LLC. Each individual investor will pay his own after year end. No quarterly estimates unless there were taxable distributions during the year (which would be unusual).
    Last edited: Sep 3, 2019
  10. Lucky you. Makes all us Yanks wish we lived in the UK.
    #10     Sep 3, 2019