Tax staff Randall Poe recently published an article for our newest KROST Quarterly Magazine: The Financial Services Issue titled “Trader Tax Status: Do You Qualify?”.
WHAT IS TRADER TAX STATUS?
Trader tax status is a special set of rules that allow traders to treat trading activity as an ordinary business. Trader status allows taxpayers to deduct the trading and broker fees directly from their adjusted gross income (AGI). This treatment is very advantageous because the 2017 Tax Cuts and Jobs Act (TCJA) now disallows individuals from deducting trading and broker fees through their 2% miscellaneous deductions on Schedule A.
WHO QUALIFIES FOR TRADER TAX STATUS?
According to the Internal Revenue Service, taxpayers are categorized as either investors or traders. Even taxpayers that extensively engage in trading securities can be categorized as an investor, but not a trader. While both investors and traders can qualify for Trader Tax Status, it is important to identify the difference between the two categories….Continue »