Calculating an accurate taxable gain or loss from trading is a complex process.
DOING YOUR OWN TAXES IS NOT EASY.
The IRS replaced Schedule D-1 with Form 8949 and introduced new requirements for brokerage 1099-B reporting.
Therefore, trader taxes have become much more complex than they were just a few years back.
YOUR BROKERAGE 1099-B MAY NOT BE ADEQUATE FOR TAX REPORTING.
1099-Bs are not consistent across brokers, and many contain
wash sale rules are different for taxpayers than for brokers.
For example, any of the following situations could change your taxpayer wash sale calculations:
- You have more than one trading account, even at the same brokerage.
- You trade options on stocks or ETFs.
- You elected Section 475(f) mark-to-market method of accounting.
- You traded in an IRA.
In such cases your brokerage 1099-B gross sales and cost basis amounts will not match with what you
are required to report on Schedule D Form 8949.
SEVERE CONSEQUENCES WHEN TRADING IN AN IRA
If you sell a stock or an option at a loss in your taxable account and then
repurchase it in your IRA, the loss is permanently disallowed according to the IRS
wash sale rules for IRAs.
Don't take our word for it, please read what Barron's Magazine® had to say about
the latest IRS changes.
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Many traders overpay their taxes, or underpay and face penalties.
RECENT SURVEYS reveal some startling statistics:
- 51% of those who compared their 1099-B with TradeLog found their 1099-B reported higher gains.
- 85% needed to make additional wash sale adjustments not reported on 1099-B.
- 34% found errors or omissions on their 1099-B not attributed to wash sales.
In another survey, 47% said they only used their broker provided 1099-B for trader taxes,
indicating that many traders are still filing inaccurate tax reporting.
A recent blog article on the GreenTraderTax.com website stated:
"Unless you use proper software on all your individual taxable and IRA accounts, you will probably handle wash sales wrong and under-report or over-report your taxable income. In these cases, you can’t rely on 1099-B reporting because brokers use a different set of tax compliance rules than taxpayers in calculating and reporting wash sale losses."
Popular tax programs were not designed for active traders. You might also be surprised
to learn that popular tax programs like TurboTax® and H&R Block Deluxe®
import the same brokerage provided 1099-B profit and loss information, with absolutely no way to verify its
accuracy or make adjustments. In addition, most of these programs are not equipped to handle more than
a handful of trades.
TurboTax® is a trademark of Intuit, Inc.; H&R Block® is a trademark of H&R Block, Inc.
What tool will you use to file your taxes from trading?
TradeLog was designed for the tax reporting needs of active traders.
Complex Wash Sale Adjustments Done Correctly
Wash sales between stocks and options, and across all accounts - including IRAs.
Potential Wash Sales Report
This exclusive report can save you from having your trading losses disallowed by the wash sale rule.
Accurate, IRS Schedule D Form 8949
Tax reporting according to IRS rules for taxpayers - not brokers.
Adjust for Exercised Options, Stock Assignments, and Corporate Actions
Don't rely on your broker to make complex tax adjustments for you.
1099-B Reconciliation and Adjustment Tools
Verify your tax reporting with broker reporting and make needed adjustments.
Proper Classification of Broad-Based Index Options
Automatically identify index options for more favorable section 1256 tax treatment.
Mark-to-Market Accounting Features
For traders with IRS section 475(f) status, and traders of section 1256 contracts.
A Proven Trader Tax Solution.
method for generating accurate capital gains and losses has been used by active traders
and tax experts for over 14 years.
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