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If you’re actively trading stocks—multiple times per day or week—you might qualify as a day trader in the eyes of the IRS. And if you do, the tax benefits are nothing short of game-changing.
- Deduct your trading expenses—including margin interest and home office costs
- Eliminate self-employment tax on your profits
- Get access to powerful mark-to-market accounting options
- Set up a retirement plan with an S corporation (if it makes sense for you)
But here’s the catch: qualifying as a trader isn’t easy. There’s no clear IRS definition—and it changes year to year. This article breaks down exactly what you need to know to meet the IRS’s “day trader” standard and reap the rewards.
Read Part 1 of our Trader Tax Guide and find out:
- What tests you must pass to claim trader tax status
- How to structure your activity to qualify
- Which expenses are deductible (and which aren’t)
- Whether forming an S corporation is worth it for traders