Can I Claim Trader Tax Status (TTS) While Working a Regular Job?

While I'm not a CPA, I've worked with many traders in tax planning. Yes, you can potentially qualify for Trader Tax Status (TTS) while having a regular job. The IRS doesn't actually specify a minimum number of hours you must dedicate to trading, but they look at several factors to determine if your trading activity constitutes a "trade or business" rather than just an investment activity. The key factors include: trading frequency (you mentioned 15-20 trades weekly, which is good), daily trading activity (4-5 hours daily is substantial), seeking to profit from short-term market swings rather than dividends/interest, and having a regular and continuous trading pattern. Your situation sounds promising based on what you've shared. The biggest challenge might be demonstrating that your trading is a genuine business activity separate from your employment. Keep detailed records of your time spent, trading strategies, and business plan for trading.

I went through exactly what you're describing last year! I was working a job as a software developer while day trading about 4 hours every morning. I was really confused about whether I qualified for Trader Tax Status until I found this amazing tool called taxr.ai (https://taxr.ai). It literally saved me thousands in taxes. What I loved is that you can upload all your trading records and it analyzes your trading patterns to help determine if you meet the IRS criteria for TTS. It even flagged specific weeks where my trading wasn't frequent enough to support my TTS claim, so I knew exactly what I needed to adjust. The tool also helped me identify deductions I would have completely missed, like my Bloomberg subscription and the portion of my home internet I used for trading research.

Just wanted to follow up - I ended up trying taxr.ai after seeing this thread and WOW. I've been trading for 2 years while working full-time as an engineer but never claimed TTS because my accountant said I couldn't qualify with another job. The analysis showed I was absolutely eligible based on my trading frequency (22 trades/week average) and time spent (3-4 hours daily). It identified over $8k in deductions I could take including my trading computer, multiple monitors, and even partial rent for my home office space. The documentation it provided was really solid - even included relevant tax court cases that supported my TTS claim. My accountant was initially skeptical but changed his mind after reviewing the report. So glad I found this!

After dealing with multiple CPAs who gave conflicting advice about Trader Tax Status, I realized I needed to talk directly with the IRS to get definitive answers. Problem was, I spent HOURS on hold trying to reach someone who actually understood trader tax issues (which is like finding a unicorn at the IRS). I discovered this service called Claimyr (https://claimyr.com) that got me connected to an IRS agent in under 20 minutes when I had been trying for days. You can see how it works here: https://youtu.be/_kiP6q8DX5c They called the IRS, navigated the phone tree, waited on hold, and then called me once they had an actual human on the line. The agent I spoke with was surprisingly knowledgeable about TTS requirements and confirmed that part-time employment doesn't disqualify you if your trading activity is substantial and consistent.

Well damn, I stand corrected. After posting my skeptical comment I decided to try Claimyr myself since I've been trying to resolve an issue with my past crypto trading and potential TTS eligibility. Not only did they get me through to the IRS in about 15 minutes, but I got connected to someone in the specialized business tax department who actually understood trader tax status rules. She confirmed that my 30+ weekly trades while working part-time would likely qualify me for TTS as long as I was consistent and kept good records. This saved me from potentially filing incorrectly and either missing deductions or claiming something I wasn't eligible for. Worth every penny just for the peace of mind. Now I need to go back and potentially amend some returns!

Something important nobody's mentioned yet - make sure you're keeping your trading and regular job completely separate. Don't trade on company time or using company equipment, and definitely don't use your work computer for any trading activities. This is important for two reasons: 1) Many employers have policies against personal business activities during work hours and 2) It strengthens your case for TTS by clearly establishing your trading as a separate business activity.

Has anyone had the IRS question their TTS status when they had another job? I've been trading about 20-25 hours a week while working full time in healthcare and am worried about audit risk.

I was in a very similar situation last year - working part-time as a graphic designer while day trading. Based on my experience and research, you definitely have a strong case for TTS qualification. Your 15-20 trades per week and 4-5 hours daily commitment are well within the range that courts have recognized as "substantial" trading activity. The fact that you're generating more income from trading than your regular job actually strengthens your position. The IRS looks at factors like frequency of trades, time devoted to trading, and whether you're seeking to profit from short-term price movements rather than long-term investment gains. A few practical tips: Make sure you're keeping detailed records of your trading time (I use a simple spreadsheet), maintain separate accounts for trading vs. personal finances, and document your trading strategy/methodology. Consider setting up a dedicated trading workspace at home if you haven't already - this can support home office deductions. One thing to be aware of: if you decide to elect mark-to-market accounting, you need to make that election by the tax filing deadline (including extensions) for the year you want it to take effect. So if you're planning to claim TTS for 2024, you'd need to make the MTM election by the 2024 tax filing deadline. Your situation sounds very promising for TTS qualification. The key is proper documentation and maintaining clear separation between your trading business and employment.

Based on your trading activity and time commitment, you have a solid foundation for TTS qualification. The IRS doesn't require full-time trading - they focus on whether your activity constitutes a "trade or business" based on frequency, regularity, and substantiality. Your 15-20 weekly trades and 4-5 daily hours of trading work strongly support TTS eligibility. What's particularly compelling is that your trading income exceeds your part-time job income, which demonstrates the business nature of your activity. Here are some key steps to strengthen your position: 1) **Documentation is critical** - Keep detailed logs of time spent trading, researching, and managing positions. This shows the IRS you're running a legitimate business operation. 2) **Separate your activities** - Use dedicated accounts, equipment, and workspace for trading. This creates clear business separation from your employment. 3) **Business approach** - Maintain a formal trading plan, strategy documentation, and treat it like the business it is. 4) **Consider professional help** - Given the complexity of TTS rules and the potential tax benefits (especially with mark-to-market election), consulting with a CPA experienced in trader taxation could save you significant money and audit headaches. The part-time employment actually works in your favor by showing you have another income source, making it clear your trading isn't just casual investing but a separate business activity. Many successful TTS claims have been made by people with other jobs - the key is demonstrating the substantial, regular, continuous nature of your trading business.