Day traders (those who qualify for trader tax status, or TTS) are in the business of buying and selling securities.

They live in the fast lane by frequently buying and selling stock to profit from daily market movements. This activity is fraught with risk.

If you qualify as a day trader, however, you have many tax benefits that are not available to regular investors.

Trading Expenses Deducible

If you qualify as a day trader, your trading expenses are fully deductible as business expenses.

This includes home office costs, startup expenses, business property (such as computers and software), seminars and other education, subscriptions, and other expenses. Traders may also fully deduct margin interest as business interest—a substantial deduction for many traders.

You can deduct these expenses from both your trading income and non-trading income such as W-2 income. Even if you have a trading loss, you can deduct your trading expenses against non-trading income.

Commissions and other costs of buying or selling securities aren’t deductible as business expenses—they must be deducted from the securities’ cost basis ... Log in to view full article.