Tax Tip #186

Thinking of giving up your day job to become a day trader for 2024? Better hurry!

An election needs to be made by 4/15/2024 for the IRS to recognize day trader status & the tax benefits that come with it.

To be engaged in business as a trader in securities, you must meet all the following conditions:

• Profit from daily market movements in the prices of securities and not from capital appreciation;
• Have substantial activity;
• Carry on the activity with continuity and regularity.

One of the many advantages of being a day trader is if there is a net capital loss of more than 3K for the year.  As an investor, the loss is limited to 3K and the remainder is carried over to the following year.  As a day trader, the loss is deductible in full in the year of the loss.

Have day trader-related questions?  Reach out to a team member.