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need help 1st time trader and taxes

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Money Talk > Taxes

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forbanger
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need help 1st time trader and taxes  Reply with quote  

Hi guys,
Being new to trading (started last year), I have a few question in regards to taxes.

What tax software do most of you use? I guess, what is the best out there.

I have a tax place that prepares my taxes and when they saw the paper work I had I swear they wanted me to take everything and leave. So just for back up I want to figure out what the best software is out there. I do have a working knowledge of taxes but by no means am I an expert.

Just in case they decide not to do my taxes I need a back up plan.

Thanks!

P.s. I didn't make any money this 1st time out. I actually lost a crap load Sad
Post Mon Feb 09, 2009 10:18 pm
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coaster
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This isn't a backup plan suggestion, this is a primary plan suggestion: get the latest edition of a book by Ted Tesser, titled "The Trader's Tax Survival Guide" (if he's still calling it by its original title) The IRS has significantly tightened up their definitions of "trader status" and you can no longer trade a bit on the side, hoping to be able to deduct your expenses and losses on Schedule C. You have to meet some pretty tight requirements, including a mark-to-market election that you can't do retroactively. If you're aware of all this, fine, then just run the stuff through Turbo Tax. If you kept all the proper records you should know where to plug in all the numbers in forms mode. If you're not aware of all this, then it's too late to do it for 2008. Take your losses on Schedule D and carry them forward. You can carry the excess losses forward for as long as you need to in order to offset against ordinary income.

You're really better off losing your first year. If you can keep going after this, you're prepared for what lies ahead. Psychologically it's much better than having a great year right off the bat. Then you fall into the trap of thinking you're a hot trader, you risk too much capital on your subsequent trades, and you bust big time (instead of small time) Learn your lessons, lick your wounds, revamp your trading plan to address your deficiencies, and KEEP AT IT. Good luck, but with proper money management you don't need luck, you just need a good plan and the discipline to follow it. Smile

~Tim~
Post Tue Feb 10, 2009 1:23 am
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oldguy
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quote:
P.s. I didn't make any money this 1st time out. I actually lost a crap load


The good news is that you get a bunch of it back in April - you can deduct the loses on the ones that you actually sold. (I, too, harvested some 2008 losses Smile )

I use Turbo Tax, it asks questions and you simply type in the answers - the calculations are all done just like a spreadsheet. On schedule D you list each stock that you bought/sold. Purchase price and date, sell price and date. The spreadsheet will show your gain or loss, and sum them. It will sort the long term gains and the short term gains and treat them accordingly. If you have more than one sheet, Turbo will take care of that seamlessly, When you complete schedule D the software will put the sum on your 1040 for you in the proper catagories.

Whether or not you get your taxes done, it would be a good idea to buy the TTx and do it yourself - not to save the $100 but for the education - you will be surprised at how much that eduaction will help your future planning for the next 30 or 40 years.
Post Tue Feb 10, 2009 1:30 am
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coaster
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quote:
Originally posted by oldguy
Whether or not you get your taxes done, it would be a good idea to buy the TTx and do it yourself - not to save the $100 but for the education - you will be surprised at how much that eduaction will help your future planning for the next 30 or 40 years.

That's a great observation. I've been using TTax for years; I think since '94 if I remember right. Anyway, the interview mode really wasn't all that great back then (well, worthless would be better put) and I started right off using it in forms mode. So I was forced to learn tax code every year I had something new I had to plug in. Not only do you learn tax code this way, you also learn to trust TTax to come up with the right numbers. This is a good thing because if you ever do have to use it to figure taxes on somethiing you don't quite understand what's going on, then you have a much better feel that TTax is giving the straight scoop.

Interview mode works quite well now; I'd recommend it for a TTax noob.

I've never used Tax Cut, but from reviews I've read lately it's pretty much the equivalent of Turbo Tax.

~Tim~
Post Tue Feb 10, 2009 1:37 am
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forbanger
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Thanks guys! I may just end up going the turbo tax route.

I actually use gainskeeper for the schedule d form. It is a pretty sweet software but spendy.

Thanks again!
Post Thu Feb 12, 2009 4:00 am
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Scrutnizer
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I thought about day trading on the stock market. If I buy and sell daily, how will I be taxed? Am I only taxed when I draw the money from the account? Am I taxed when I make a profit and how about if I reinvest? Any info is greatly appreciated.
Post Tue Jan 05, 2010 9:00 am
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coaster
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You're taxed on net gains = profitable trades minus losing trades and the tax rate will be as ordinary income because they're short-term (less than one year).

However, you should also know that most new day traders lose money, and they lose quite a bit of it. It's a steep and very expensive learning curve. So don't do it unless you can stand a big loss. Losses are deductions on your tax return.

~Tim~
Post Tue Jan 05, 2010 3:23 pm
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