new here with tax questions

[traderml]

Hi, I'm planning to start daytrading soon. But I heard the daytrader's tax is quite complicated. I wonder what the best I can do now to make the tax job next year easier. The service on tax preparation provided by different brokers matters and may affect my choices for opening brokerage accounts, right now I'm think about wellst rade from wells fargo. Any suggestions? Also I live in northern California, any special state tax law applied for daytraders here? Is that true you have to pay the tax quarterly? Any inputs are appreciated. I just want to well-prepared for everything before I start. Thanks.

[RayJohns]

Originally Posted by traderml

Hi, I'm planning to start daytrading soon. But I heard the daytrader's tax is quite complicated. I wonder what the best I can do now to make the tax job next year easier. The service on tax preparation provided by different brokers matters and may affect my choices for opening brokerage accounts, right now I'm think about wellst rade from wells fargo. Any suggestions? Also I live in northern California, any special state tax law applied for daytraders here? Is that true you have to pay the tax quarterly? Any inputs are appreciated. I just want to well-prepared for everything before I start. Thanks.

TDameritrade has a nice setup for taxes. You just download all the info you need into a spread sheet pretty much. What part of CA are you in? I can make some suggestions. Also, check out www.daytradertax.com (a sponsor). Paul from that website is also a moderator of this forum, so he may be by to comment also.

As far as taxes, unless you elect trader status, then I think it's pretty straight forward. I'm not 100% sure on the trader status, but I think it allows you to handle your capital gains and losses slightly differently or something. I am not in that category because I make money from sources other than trading as well.

Normally paying your taxes quarterly is when you are self employed. If your only source of income is from trading, then you may be subject to paying tax estimates all right. With that said, the estimates are usually based on the previous years income I think. The best bet is to find yourself a good CPA who is familiar with handling taxes - that's what I do. I can refer you to mine if you are in this area or nearby. Or contact Paul at daytradertax.com - he should be able to handle it for you as well.

Ray