Day Trader & Form 8829

[Unregistered]

Could some please clarify how I would handle this situation? I qualify as a day trader and file a Sch C to show my trading expenses. I also do some Web Design work in the evenings and weekends, and file a Sch C for this income/expenses. I have a home office I use for both businesses and therefore file form 8829 (Business use of home). On line 8 of 8829, it asks the total gain derived from all Sch C forms and Schedule D(?). As a day trader, my Sch C will always show a loss, and this brings down my other business income to a TOTAL loss. I really had an overall gain, however, but the trading income is shown on Sch D. Do I figure my trading gains into Line 8 of Form 8829?

Another question. When figuring Schedule SE, I don't combined my Sch C lose as a "day trader" with my other business Sch C as a Web Designer, correct? I will ignore my Sch C as a day trader when figuring SE tax, right?

[veritas]

Have you considerd hiring a professional? Your time is valuable and better spent doing what you are best at.

I wouldn't try to design my webpage even though I know I could.

[Roland Slugg]

You are correct, sir

Do I figure my trading gains into Line 8 of Form 8829?

Yes, per the instructions for F-8829, line 8.

When figuring Schedule SE, I don't combined my Sch C lose as a "day trader" with my other business Sch C as a Web Designer, correct? I will ignore my Sch C as a day trader when figuring SE tax, right?

Correct on both counts. (IRS Pub 550, pg. 72; and Regs §1.1402(a)-6)

To qualify for the OIH deduction it's vital that you are truly a trader, and not simply an investor. If you have a way to access court cases, look up Moller v. United States, 721 F.2d 810 (Fed. Cir. 1983), cert. denied, 467 U.S. 1251 (1984), and Higgins v. Commissioner, 312 U.S. 212 (1941). If you fail to qualify as a trader, you will lose the OIH deduction for both the trading activity as well as the web design business, since they share the same space.

[Oxtrainer]

Day Trader

You need a professional and one with some experience at that. The few
dollars you save doing your own could very easily cost you much and gain you
an audit.

[DaveO]

Oxtrainer, Roland and Veritas are all correct

I would elaborate on the business aspect of being a day trader. I don't know how regular and continous your trading activity is or if you have other employment besides the design business.

I had a budding day trader who even though they had a full time job seemed to be active enough. After a year of 5000+ trades I agreed to set up the "C" reporting his office expense and 6000 or so of trades on the "D". He wanted the mark to mark election at the same time but I said "Let's wait a year and see how it goes." The next year he came in with less than 100 trades. Needless to say he is no longer a day trader and won't be again, at least not at this office.

Make sure you qualify. Log your hours as well as your trades.