I day traded last year and had a capital gain of about 10,000. When I connected my brokerage account with my turbo tax software the amount I owed jumped to 175,000 dollars. Is day trading taxed by capital gains only or on the entire amount invested and what should be my next step?
Answers:
if you made your living as a day trader and nothing else, your income is taxed as ordinary income, no capital gains.
but,, if you do pay tax on your capital gains, then like the guy above me said,, you must not have input your cost basis in the stocks you sold,, just the selling price. You would only pay on your gains, not on the original investment , you'd show the gain or loss between what you paid and what you sold for.
It seems like only sales prices are coming through. You probably have to manually input your purchase prices to offset your sales prices in order to get the proper short term capital gain for that tax year.
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