Trader vs. Investor
Most individuals — even those who trade a few times a week — are, by the IRS’s definition, investors. But if you use Stock Circles to buy and sell stocks day-in and day-out, then you may be able to qualify as a trader, a title that can save you big bucks at tax time.
Are you a trader or an investor?
- You use Stock Circles day-in and day-out.
- Preferably, you don’t have a regular full-time job.
- You have established a regular and continuous pattern of making lots of trades.
- Your goal is to profit from short-term market swings.
If you let Stock Circles do its magic all week long, make thousands of short-term trades a year and don’t have a full-time job, the IRS should agree that you are a trader. If you choose, you can actually be both a trader and an investor. You must segregate your long-term holdings by identifying them as such in your records on the day you buy in. Then they won’t affect your trader status.
What are the benefits?
From the IRS’s perspective, a trader is self-employed. This means that you can:
- Deduct all your trading-related expenses.
- Deduct your margin account interest.
- Write-off equipment used in your trading activities more than 50% of the time.
- Write-off all your losses.
- Avoid paying self-employment taxes.
If you are thinking that you qualify, be sure to check with your accountant or go to www.irs.gov for more information.