Yet, like many losing traders, Bloom swears he's learned the system and vows to keep trading. The tax question for most day traders, then, is not how to handle their vast winnings, but how to deal with their losses. You probably can't keep your day job. Taxwise, average investors have it worst. When they win, they must pay taxes on all gains that year, with no ceiling.
Traders enjoy several breaks.
They can deduct unlimited business expenses for such things as computers on Schedule C, which trims adjusted gross income. Even many accountants don't know that. To show this isn't just an expensive hobby, the trader must be trying for a profit. Then again, you may run out of patience first. While big accounting firms say listing is necessary, day traders' accountants use a shortcut.