How are short term stock trades on CashApp taxed? Day trading tax implications

I've been using CashApp for some day trading and short-term stock flipping this year. Nothing major, usually under $700 per trade, just buying and selling different stocks. Some I'd flip same-day, others I'd hold for a week or two before selling. Around June, I started wondering about the tax situation and checked my account settings. It shows I've made about $46k in total stock purchases throughout the year, with a net loss of around $790. My current portfolio is sitting at about $4,900 (these I've held longer than 30 days, thankfully). The thing is, my regular job income for the year is actually $52k! I'm worried the IRS will somehow think I made $98k this year (my job income plus all those stock purchases) and tax me at a much higher rate. If I've taken that $790 net loss but sold those stocks before the 30-day mark, does that change anything about my tax situation? Will my tax bill unexpectedly skyrocket because of all this trading activity even though I actually lost money on it?

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20 comments

Khalid Howes

•8M

Don't worry, the IRS won't think you made $98k! Your stock purchases (the $46k) aren't income - they're just capital you invested. Only your gains or losses from selling those stocks matter for taxes. Since you had a net loss of $790 from short-term trades (held less than a year), that's actually going to reduce your taxable income, not increase it. You can deduct capital losses against capital gains, and if your losses exceed your gains, you can deduct up to $3,000 against your regular income. For tax reporting, CashApp will send you a Form 1099-B showing all your trades for the year. This form will break down your cost basis (what you paid) and proceeds (what you sold for) for each transaction. That's what you'll report on Schedule D of your tax return. The stocks you're currently holding won't affect your taxes until you sell them. And even then, only the difference between what you paid and what you sold for matters.

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Khalid Howes

•8M

CashApp should track your cost basis and include it on your 1099-B form. Most modern brokerages are required to report this information to the IRS. However, it's always a good idea to keep your own records of all transactions just to verify everything is correct. For some transactions (especially if you transferred stocks from another platform), the cost basis might be listed as "unknown" - in those cases, you would need your own records to establish what you originally paid.

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Ben Cooper

•8M

I was in a similar situation last year with tons of short-term trades and was STRESSED about taxes. Then I found https://taxr.ai and it literally saved me hours of frustration. You just upload your 1099-B from CashApp and it automatically sorts your trades, calculates your gains/losses, and tells you exactly what you owe. It even finds tax-loss harvesting opportunities you might have missed! The best part was when I had some trades where CashApp didn't report the cost basis correctly, taxr.ai flagged them so I could fix them before filing. Huge relief because I was terrified of getting audited.

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Ben Cooper

•8M

Yes, it works with pretty much all the major platforms - CashApp, Robinhood, Webull, TD Ameritrade, etc. You just upload all your forms and it consolidates everything together. Makes reconciling super easy. It absolutely handles wash sales correctly! That's actually one of its best features. It automatically identifies potential wash sales across ALL your accounts (which many tax programs miss if you're trading the same security on multiple platforms). It even shows you visually which trades triggered the wash sale rules so you understand what happened.

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Naila Gordon

•8M

So I tried taxr.ai after seeing it mentioned here and wow, it's actually legit. I was mixing trades between CashApp and Robinhood and had NO idea I had several wash sales happening between the platforms (bought the same stock on Robinhood after selling for a loss on CashApp). The visualization showing all my trades timeline was super helpful. It calculated that I had about $1,200 in disallowed losses from wash sales that I would have completely missed. Already finished my taxes and even got a slightly larger refund than expected because it helped me identify some losses I could claim that I had overlooked!

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Darren Brooks

•8M

If you had trading losses and need to talk with the IRS about your tax situation, good luck getting through to them! I spent WEEKS trying to get someone on the phone about a similar issue last year. Then I found https://claimyr.com and used their service that holds your place in line with the IRS. You can watch their demo at https://youtu.be/_kiP6q8DX5c - basically they wait on hold for you and call you when an actual IRS agent is on the line. Saved me like 2 hours of hold music!

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Darren Brooks

•8M

It's not about getting to the front of the line - they just wait in the queue for you! Their system calls the IRS and navigates the phone tree, then sits on hold. When an actual human IRS agent picks up, their system calls your phone and connects you directly. They don't have any special access or relationship with the IRS. It's just a service that waits on hold so you don't have to sit there for hours listening to the hold music. Super helpful if you're working during the day when the IRS is open and can't just have your phone tied up for hours.

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Elliott luviBorBatman

•8M

I take back what I said earlier. After waiting on hold with the IRS for THREE HOURS yesterday and getting disconnected, I was desperate and tried that Claimyr service. Honestly didn't think it would work, but I got a call back in about 40 minutes with an IRS agent already on the line. Managed to sort out my capital gains reporting question in about 15 minutes. Wish I'd known about this months ago when I was trying to figure out my tax treatment for crypto trades!

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Demi Hall

•8M

Just a tip from someone who learned this the hard way: Make sure you're factoring in wash sales when calculating your losses. If you sell a stock at a loss and then buy the same or "substantially identical" stock within 30 days before or after the sale, you can't claim that loss immediately for tax purposes. With all your short-term trading, it's very possible some of your trades fall under the wash sale rule. CashApp should mark these on your 1099-B, but double-check to make sure they're calculated correctly.

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Demi Hall

•8M

The loss isn't lost forever - it's added to the cost basis of the replacement shares you purchased. So you'll eventually get the tax benefit when you finally sell those replacement shares (assuming you don't trigger another wash sale). For example: If you buy Stock X at $100, sell it at $80 (a $20 loss), and then buy it again at $85 within 30 days, you can't claim that $20 loss. Instead, your cost basis for the new shares becomes $105 ($85 purchase price + $20 disallowed loss). This way, you'll eventually get the benefit of that $20 when you sell the new shares.

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Charlie Yang

•3M

Just wanted to add something important that I learned after my first year of active trading - make sure you understand the difference between "trader" and "investor" status with the IRS. Most people doing casual day trading like you described are considered investors, which means your trading losses are capital losses (limited to $3,000 deduction per year against ordinary income). However, if you were doing this as a business (trading frequently, substantial time commitment, seeking short-term profits), you might qualify for trader status, which has different tax implications. With your $46k in trades on a $52k salary, it's probably worth understanding this distinction. Also, since you mentioned some same-day flips - just be aware that day trading can sometimes trigger pattern day trader rules with brokers (though that's more about account requirements than taxes). The tax treatment is the same whether you hold for minutes or weeks, as long as it's under a year it's all short-term capital gains/losses. Your $790 loss will definitely help reduce your tax bill, not increase it!

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