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October 27, 2021
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Home Office Deduction

  • October 27, 2021
  • 2 replies
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I'm a full time day trader. All my trading is done at home.

 

1. 

Can I take a home office deduction?

 

2.

Can I deduct my internet bill?  It is used for both trading and personal use.

 

    Best answer by

    Yes, if your trading activities qualify you as a day trader, you can take home office deduction and the percentage of internet bill that is used for your day trading business. 

    All of the following requirements must be satisfied in order for you to be considered a day trader. 

    • Your intention is making profit from daily trading of securities
    • It is a substantial activity
    • You carry on the activity continually and regularly

    You will file Schedule C to claim the expenses incurred in the trading activities as a day trader.

    What is a ‘trader’ of securities and how do I qualify for it?

    Traders in Securities (Information for Form 1040 or 1040-SR Filers)

    2 replies

    Michele_H
    October 27, 2021

    Hi @panthertwo2 Do you have day trader status with the IRS (mark to market)?  If not you are considered an investor and these deductions are not considered deductible.   

     

    Those without a trader tax designation are considered to be investors, according to the IRS. This means that they are not eligible for many of the write-offs and other things that a day trader can use to offset the amount of money that they make through their trades each year. For example, a day trader can deduct things like losses, as well as other write-offs like business expenses. An investor often cannot, and any money made either counts as ordinary income or falls subject to capital gains taxes. Including these things on your tax return, if you do not qualify for them, can result in fines, audits, and other penalties.

     

    However if you do have the correct status these expenses are deductible under the Self employed section of the tax return (Schedule C).

     

    Hope this information helps

     

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    Answer
    October 27, 2021

    Yes, if your trading activities qualify you as a day trader, you can take home office deduction and the percentage of internet bill that is used for your day trading business. 

    All of the following requirements must be satisfied in order for you to be considered a day trader. 

    • Your intention is making profit from daily trading of securities
    • It is a substantial activity
    • You carry on the activity continually and regularly

    You will file Schedule C to claim the expenses incurred in the trading activities as a day trader.

    What is a ‘trader’ of securities and how do I qualify for it?

    Traders in Securities (Information for Form 1040 or 1040-SR Filers)