What To Expect

Taxes in Day Trading - What are the Consequences and Regulations for Active Traders

To quote a United States Congressman, "Our tax code is so long it makes War and Peace seem breezy". Tax law continues to grow more complex with new legislation being introduced each year. To complicate matters on taxes in day trading, there seems to be no clear cut answers, only general guidelines and interpretations from tax law cases. As the experienced industry leader in taxation for active day traders, Traders Accounting's tax professionals draw on their diverse perspectives and skills to give you seamless service through all the challenges of tax planning, financial accounting, and tax compliance.

Since 1998, Traders Accounting has been a resource to thousands of individuals looking for knowledge regarding taxes on day trading and tax consequences. Most of our clients do not feel their current CPA firm has the knowledge required to handle complexities of their trading.

"You are absolutely correct 95% of CPA's are not sufficiently educated in this area to properly service their clients." -Henry S., IN

What is New in the 2014 Tax Season?

Key tax dates in 2014

  • January 31, IRS will begin processing personal tax returns.
  • March 17, the un-extended deadline for filing corporation returns.
  • April 15, the un-extended deadline for filing personal returns.
  • April 15, the un-extended deadline for filing LLC (taxed as a partnership) returns.
  • July 31, the un-extended deadline for filing Pension Plan Returns.
  • September 15, the extended deadline for filing corporation returns.
  • October 15, the extended deadline for filing personal returns.
  • October 15, the extended deadline for filing LLC (taxed as a partnership) returns.

Here's a quick summary if what's new in federal taxes for the year 2014.

2014 tax rates

  • Ordinary income tax brackets have kept the same rates, but the amount of income that qualifies for each bracket has been increased.
  • Capital gains tax brackets have maintained the same rates.
  • Additionally, the 0.9% Medicare surtax and the 3.8% net investment income surtax, first introduced for 2013, continue to apply to higher-income people

Standard deduction amounts have increased

  • Single: $6,200
  • Head of Household: $9,100
  • Married Filing Jointly: $12,400
  • Married Filing Separately: $6,200
  • Qualifying Widow/Widower: $12,400
  • Dependent: $1,000-$6,200

The Person Exemption has Increased

  • $3,950 per taxpayer or dependent.
  • The amount that can be claimed phases out once adjusted gross income reaches $254,200 (for single filers).

Retirement plan contribution limits have stayed the same

  • Traditional or Roth Individual Retirement Accounts: $5,500 (plus $1,000 catch-up contribution for people age 50 or older)
  • 401(k) Plans: $17,500 (plus $5,500 catch-up contribution for people age 50 or older)
  • Maximum SEP-IRA or solo 401(k) contribution:$52,000

Some new tax provisions have been introvuced

  • Penalty for failing to maintain health insurance.
  • Premium assistance tax credit for obtaining coverage through the health insurance exchange.

Foreign bank account reporting requirements have changed.

  • This form has been changed in two ways. First, the form has been re-numbered: it's now called FinCEN Form 114. Second, FBARs must be filed electronically with FinCEN. If you want to file on paper, you'll need to request permission. See the new FBAR instructions from FinCEN (pdf) and the IRS's page about FBARs.

Several tax provisions from 2013 have expired and may or may not be renewed by congress.

  • Exclusion for Cancellation of Debt Income on Primary Residences
  • Tax-free distributions from individual retirement plans for charitable purposes
  • Exclusion for qualified small business stock (modified to 50% from 100% exclusion)
  • Mass Transit Fringe Benefit Reduced (drops from $245 to $130 per month)
  • Classroom Expenses Deduction
  • Tuition and Fees Deduction
  • Deduction for Mortgage Insurance Premiums
  • Deduction for State and Local Sales Tax
  • Charitable contributions of real property made for conservation purposes
  • Credit for nonbusiness energy property
  • Credit for two- or three-wheeled plug-in electric vehicles
  • Health Coverage Tax Credit
  • Work Opportunity Tax Credit
  • Bonus Depreciation
  • Section 179 Deduction (modified to $25,000 instead of $500,000 maximum)
  • Qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements (these assets are now depreciated over 39 years instead of 15 years)

For more detailed information on tax returns, visit the tax return page.

Additional Services Offered

Traders Accounting specializes in services for day trader taxes however, our services are not limited to traders. Listed below are some but not all of the additional services offered.

Investors, while similar in certain respects to traders in securities, have their own unique tax needs. The Tax Department can address those unique needs in the most advantageous manner possible.

Beginning with the 2010 tax year the Tax Department has been listed as a qualified service provider by Workforce United.

In addition to preparing income tax returns the Tax Department offers consulting services which, allows clients to discuss issues, strategies, and the tax consequences of day trading.

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