March 9, 2021
The IRS has special rules that apply if you’re a day trader. And if you qualify, they consider you a business and self employed.
But to be in this business, you must meet all the following conditions:
1️⃣You must be trying to profit from daily market movements
2️⃣Your activity must be substantial
3️⃣You must trade continuously and regularly
Some factors go into determining this such as…
How long you hold the securities you buy and sell.
How often and how much you trade each year.
Are you trading to make a living from it.
How much time are you putting in.
You must keep detailed records.
So if all these apply, you’re considered a trader. Otherwise you’re an investor.
If you’re considered a trader, you may benefit from special tax treatment.
Disclaimer: For informational purposes only. Not Tax or Legal advice.