Day Trading Taxes, IRS Trader Tax Status vs Investor Status in US

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2022 Trader Tax update: https://youtu.be/uQaQ_1JogLQ
🔽Time stamps:
2:08 IRS Capital gain tax rates
4:13 Tax breaks & wash sale rule for investor traders
7:55 Best way for filing day trading taxes- TTS tax breaks
10:09 How to qualify for Trader Tax Status

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How to file day trading taxes in the US? How to qualify for Trader Tax Status under IRS rules. Most Day Traders and Swing Traders fall under the regular investor status when filing for IRS taxes.
Capital gains for investors fall under 2 categories: Long term and short term tax rates.

1. Long term tax rate: More favorable tax rate for investors. But only for stock market positions held for over one year. So generally day traders and swing traders do not qualify for this.
2. Short term tax rate: Day trading and swing trading are taxed as ordinary income tax rates.
Filing stock market taxes as investor status has limited write offs due to Tax Cuts and Jobs Act 2017, have to follow Wash Sale Rule, and can only claim up to $3000 capital loss against income per year.
That's why day traders prefer Trader Tax Status designation. TTS allows fully deductible losses, no wash sale rule, and generous tax write offs for trading expenses. But the TTS is harder to qualify.

General IRS Guide for Trader Tax Status
1. At least 30 hrs per week spent on trading activities
2. Average holding period is less than 31 days
3. Operating with necessary tools and software
4. Trading with a significant trading account

Zip Trader Charlie's videos on Taxes:
https://www.youtube.com/watch?v=xla4YA5OBAQ
https://www.youtube.com/watch?v=4WPE-MGgyr4

Resources referenced on Day Trading Taxes and Trader Tax Status:
https://www.benzinga.com/money/day-trading-taxes/
https://www.nerdwallet.com/blog/investing/3-day-trading-tax-tricks/
https://www.forbes.com/sites/greatspeculations/2017/06/07/how-to-become-eligible-for-trader-tax-status-benefits/#a734f0d3e354

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