Resources to Do Taxes on Day Trading Income Yourself
Day traders can do their own taxes. If you are comfortable with tax forms and if you are only day trading a little bit, you may be able to do your own taxes. Here’s what you need: the proper IRS forms and tax preparation software that can handle investment income.
Everything you want to know about taxes is at www.irs.gov
The IRS website is a treasure trove of tax information. All the regulations, publications, forms, and explanations are there, and some of it is even in plain English. The site is so vast and detailed that you’ll probably be overwhelmed.
The primary publication that covers the tax implications of day trading and other investing activities is Publication 550, Investment Income and Expenses.
Tax preparation software
Those who do their own taxes know that tax prep software is a godsend, and it’s even more valuable for those do-it-yourselfers who trade a lot. The software fills out the forms, automatically adds and subtracts, and even catches typographical errors. In many cases, it can download data straight from your brokerage account, making data entry really simple.
Most of the big brands, such as TaxCut and TurboTax, publish several editions each year — not all of which are set up to import and manage lots of trading data. Among those that have services for investors are TurboTax Premier Investments, H&R Block at Home Premium, and CompleteTax.