Navigating Taxes as an Active Trader

On numerous occasions, we have offered traders insight into how taxes interact with the market and affect trading strategy. As a provider of advanced options trading platforms and low cost stock trading, we give traders all the resources they need to understand the industry and cultivate success.

‘Tis the season for tax returns. Filing tax returns has never been a simple task — especially for traders. However, the recent tax reforms may confuse traders even more. To avoid paying more taxes than necessary, how can traders adapt their investment strategies? Now that investment expenses have been eliminated, what can traders do to maximize their profits? Find answers to these questions and more in the posts below.

5 Tax Tips Investors Might Be Missing

Although the current administration has implemented many changes, some tried-and-true tax strategies remain effective. For example, maximizing your 401(k) contributions will still result in a lower tax rate over time. Capital gains tax may have been slightly reworked, but selling a losing investment before the end of the year may still lower how much tax you have to pay. Note that although investment expenses have been eliminated, broker fees may still be somewhat recouped by applying for Trader Tax Status (TTS), which allows traders to use business treatment for trading expenses.

Entities Provide Tax Benefits to Traders

Employee benefit deductions may have changed somewhat, but creating an entity can still provide traders with some advantages. In this blog, we discussed how entity returns simplify your taxes by consolidating your trading activity on one return. Now that the tax rate for corporations has been reduced to a flat rate of 21%, creating an entity may be more advantageous than ever.

How the Tax Cuts and Jobs Act Impacts Investors, Traders, and Investment Managers

Last but not least, we recently invited Robert Green of to present a webinar that covered the recent tax reform changes that affect traders most. In his presentation, he covered the reduced tax rate for corporations, the elimination of many deductions, and many other important changes introduced by the reform. Perhaps most significantly, he stressed the benefits of TTS, which potentially allows traders to capitalize on the 21% flat tax rate applied to corporations as well as a 20% deduction on pass-through qualified business income.

Besides our posts concerning taxes in the trading industry, we also publish content relevant to many other concepts and issues that affect traders every day. To subscribe to our online stock trading blog, visit our blog page here. To learn more about our software solutions for traders, try a demo or call us at 1.888.577.3123 today.

Lightspeed Financial Services Group LLC is not affiliated with these third-party market commentators/educators or service providers. Data, information, and material (“content”) are provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities or contracts. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services or commentary provided by any of the market commentators/educators or service providers and any information used to execute any trading strategies are solely based on the independent analysis of the user.

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