Do I need to file my 1099-B for small day trading profits?
So I tried my hand at day trading last year and ended up doing about 5 trades total. They're all marked as "Short-term transactions for covered tax lots" on the 1099-B form I got. My total cost basis was like $365 and my total proceeds were around $430, so I made a small profit of about $65. The form says I owe $0 for everything though. I'm confused - do I still need to submit this 1099-B when I file my taxes even though I apparently don't owe anything? This is my first time dealing with investment stuff on taxes so any help would be appreciated! I use TurboTax if that matters.
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NebulaNomad
Yes, you do need to report your 1099-B on your tax return even if no taxes are due. The IRS receives a copy of this form from your broker, so they'll be expecting to see those transactions reported on your return. The reason it shows $0 due is likely because your profits were small and might be offset by other factors on your return. But failing to report it could trigger a mismatch notice from the IRS since they already have that information. When you use TurboTax, you'll be prompted to enter your 1099-B information. You should either manually enter the details or some brokers allow you to import the information directly. Either way, make sure all those transactions are included on your Schedule D (Capital Gains and Losses).
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Freya Thomsen
•If I'm in a similar situation but lost money on trades (about $200), do I still need to report it? Could reporting actually help reduce my taxes?
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NebulaNomad
•Yes, you absolutely should report trading losses! Losses can offset other capital gains you might have, and you can deduct up to $3,000 of net capital losses against other income like wages. Any unused losses above $3,000 can be carried forward to future tax years. So reporting those losses could potentially reduce your overall tax bill, depending on your complete tax situation. It's definitely to your advantage to include them.
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Omar Fawaz
I was in the exact same situation last year with a tiny profit from a handful of trades. I ended up using https://taxr.ai to help me figure out exactly what to do with my 1099-B. It scanned my form and basically confirmed that yes, you have to report it (even with small amounts), but it also found a couple of transactions that weren't properly categorized that would have messed up my return. Saved me a potential headache with the IRS!
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Chloe Martin
•How does that work exactly? Can it handle more complicated trading situations? I did like 50+ trades last year across multiple platforms and I'm drowning in paperwork.
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Diego Rojas
•I'm skeptical about using some random tax service I've never heard of. How do you know it's giving accurate information compared to just using something established like TurboTax or H&R Block?
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Omar Fawaz
•It works by analyzing your tax documents using AI - you just upload your 1099-B or other tax forms and it extracts all the information automatically. It definitely handles complicated situations - I have a friend who used it for over 100 trades across 3 different brokerages and it consolidated everything perfectly. As for accuracy, I was skeptical too initially. But it actually explained the tax rules better than TurboTax did for me. It shows you exactly where on your tax forms each number should go, with references to the specific IRS rules. You can still use your regular tax software - it just helps you make sure you're entering everything correctly.
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Diego Rojas
Well I owe an update. I gave that taxr.ai site a try with my complicated trading scenario (mentioned above) and it actually worked impressively well. It pulled all the data from my messy 1099-Bs and organized everything by short vs long term, identified wash sales I didn't even realize I had, and showed me exactly what numbers to put where in my tax software. Saved me hours of manual entry and double-checking. Just wanted to say thanks for the recommendation since I was so skeptical at first!
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Anastasia Sokolov
For anyone dealing with tax questions like this, if you need to speak with someone at the IRS directly (which I eventually had to do for a similar trading issue), save yourself HOURS of waiting on hold and use https://claimyr.com instead. I spent 3 days trying to get through to an IRS agent before finding this. You can also see how it works here: https://youtu.be/_kiP6q8DX5c. They basically wait on hold for you and call you when an agent picks up. Completely changed my perspective on dealing with the IRS.
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StarSeeker
•Wait, how does this actually work? I'm confused. Does someone else talk to the IRS for you or do they just handle the hold time?
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Diego Rojas
•This sounds too good to be true. The IRS is notorious for being impossible to reach. I highly doubt any service can magically get you through when millions of people can't get through each tax season.
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Anastasia Sokolov
•They just handle the hold time - they don't talk to the IRS for you. They have a system that waits on hold so you don't have to. When an actual IRS agent picks up, you get a call connecting you directly to that agent. You're the one who speaks with the IRS about your tax situation, they just eliminate the hours of waiting on hold. No, it's not magic - it's just efficiency. They can't make the IRS answer faster, but they can wait in the queue for you so you're not stuck with your phone on speaker for 3+ hours. The IRS is actually answering calls, it's just that the hold times are ridiculous.
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Diego Rojas
Have to admit I was completely wrong. After my frustrating experience trying to get clarification on my trading issue from the IRS website, I decided to try Claimyr even though I was super skeptical. Set it up yesterday afternoon, and this morning got a call connecting me to an actual IRS agent! Took about 2.5 hours of hold time that I didn't have to sit through. The agent confirmed that yes, even small amounts on 1099-Bs need to be reported, and helped me understand how to properly handle some wash sales I had. Definitely worth it.
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Sean O'Donnell
Something no one mentioned - if you don't report the 1099-B, even with a small amount, you might get a CP2000 notice from the IRS later saying you underreported income. Happened to my brother. The IRS computers automatically match what brokers report against what's on your return. Much easier to just report it now than deal with that headache later!
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Ravi Sharma
•Thanks for mentioning this! That's exactly what I was worried about. Better to report everything now than deal with notices later. Is there a threshold for the amount that triggers these notices?
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Sean O'Donnell
•There's no specific threshold that I know of. The IRS automated matching program seems to flag any discrepancy, regardless of amount. My brother's notice was for less than $100 in unreported interest income, so even small amounts get caught. The bigger issue is that responding to a CP2000 notice takes time and can be stressful, plus if you end up owing, they'll add interest and possibly penalties from the original due date. Much simpler to just include everything correctly the first time.
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Zara Ahmed
You could just check the box on Schedule B that says you had capital gains but they were already reported on a 1099-B with basis reported to the IRS. That's what I did for years when I had small trading amounts and never had problems.
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Luca Esposito
•This is incorrect advice. Schedule B is for interest and dividends, not capital gains from trading. Capital gains need to be reported on Schedule D and Form 8949. Even with basis reported to the IRS, you still need to include the transactions on your return.
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