Tax prep is rarely fun, but it can be an especially big nightmare for active traders. When it comes to your taxes, you could be facing a daunting pile of paperwork and a hefty tax bill. The IRS will be paying close attention to your trading activity, and if you don’t report it correctly, they’ll take a big bite out of your profits. The taxation rules for day traders are constantly changing, too. Failing to stay up-to-date on those taxation changes will cost you.
You can make tax time a lot easier on yourself (and a lot easier on your bank account) with tax software made for day traders. Good software will help you automate your trading activity while looking for ways to reduce your tax obligation. It will also update automatically with new tax regulations to take the guesswork out of reporting. Here are ten tax services to consider when you get ready to file.
What We'll Cover
TurboTax is Intuit’s full-featured tax software, and it has good options for active traders, too. This online tax service makes it simple to file. Start by answering questions about your life, income, and trading activity. TurboTax will then walk you through everything you need to fill out to complete your tax return. Intuit also owns Quicken and QuickBooks, so syncing them with TurboTax will make the filing process even faster. The tools included in their more expensive packages will help you manage even the most complicated tax returns.
- Makes it easy to report your investment income
- Calculates your capital gains taxes for you
- Capable of handling thousands of transactions so it’s great for busy traders
- You’ll need to purchase the premier plan to get all the features you need to report investment income
- State tax reporting is more expensive than with some other programs
GainsKeeper is tax software made for active traders. There is a lot of automated record-keeping built into the product, which streamlines your reporting. Even things like calculating your capital gains taxes are largely automated. The software offers portfolio tracking along with Schedule D and tax preparation. Traders will also appreciate the optimization tools, which useful for helping you find ways to cut down on your tax obligation. It’s solid software for day traders, though could end up being a more expensive option for some.
- Good selection of customized reports, including mark-to-market reports
- Can work with other tax reporting software programs
- While only $69 for a license, the total cost of ownership can end up significantly higher than other software packages
TradeLog is tax software specifically designed and built for active traders. It understands what is needed when it comes to accurately reporting and filing taxes on investment income. It’s more than just a comprehensive cloud-based tax service, though. TradeLog also features tools for managing your trade history, analyzing your trading performance, and alerts on your trade activity. It’s easy enough to get started, and webinars are available if you want in-depth guidance on using all the features included in the software.
- Comprehensive reporting for traders including wash-sale reporting and mark-to-market accounting
- Helps you identify possible tax benefits you might not know you are eligible to receive
- Automatically downloads trading data from brokerage firms for easy data entry
- TradeLog bases its annual subscription rates on the number of trades per year, so some may find it pricey
4. H&R Block
If you want to stick with a tried-and-true company for your tax preparations, H&R Block is a good choice. Started in 1955, it’s become one of the biggest names in tax preparation. While they don’t offer tax software for active traders specifically, their software will do what you need it to do. It will generate a Schedule D, calculate your capital gains taxes, and prepare your paperwork to file your taxes. It’s not an inclusive software package, though, so you’ll want to track your portfolio and trades elsewhere.
- In-person help in one of their branches is available when you need it
- Audit support will help you prep and organize your tax information in case of an audit
- Millions of individuals and businesses use this long-established company every year for tax prep
- You’ll need to track your trades elsewhere and import the information to prep your tax return
- If you need help, you could end up waiting in line at one of their locations
5. Credit Karma
Credit Karma established itself a few years ago as an easy way to keep an eye on your credit score. They expanded their suite of free financial tools with the addition of free tax preparation. For traders, it’s the cheapest option out there, because it’s completely free, even for state returns. Beware that the service may not work for all tax situations, though. Active traders can file their Schedule D, so Credit Karma should work for most. If you have a more complicated tax situation, you may need to pay for a more comprehensive service.
- You can file for free, state and federal, making it the cheapest option on the list
- Despite the free price tag, they also include free audit defense
- Guaranteed maximum refund
- May not support all tax situations
Active Traders will need to opt for TaxAct’s Premier Edition. This edition allows you to report your stocks, gains and losses, and other investments. It also includes prioritized support. If you aren’t sure about a question on your taxes, you can call one of their CPA or IRS-enrolled agents for help, and you’ll jump to the front of the line. The system will keep up to seven years worth of returns in their secure online server, keeping all your tax returns in one convenient spot.
- Prioritized support offers screen sharing so a CPA or IRS-enrolled agent can assist you
- Guaranteed to give you the maximum refund possible
- Stock Assistant makes it easy to import your investment data
- You’ll pay $79,95 just for your federal return with additional cost to file any state returns you might need
7. eSmart Tax
eSmart Tax offers a deluxe edition made for investors. As day trader tax software, it’s pretty robust, especially for the price. The software will easily handle your investment income reporting as well as itemized deductions. It’s part of the Liberty Tax family, so if you run into any issues you can visit one of their 2,500 storefronts across the United States and get answers from a tax professional.
- Accuracy guarantee will pay any penalties and interest if the software miscalculates your taxes
- You can get a printed and bound copy of your return through the software, something normally only offered by CPAs
- While the software is fairly straightforward, experience filing is useful to make sure you don’t miss anything
Deskera offers tax prep software that promises to make calculations and filing easy. They offer a 30-day free trial, then plans start at $9 per user per month. Active traders will want to opt for their more expensive Essential plan, though. It allows for unlimited transactions and multiple currencies. Since Deskera is a global company based in Singapore, there are a lot of options here for day traders working in multiple countries.
- Tax rules for tax jurisdictions around the world
- A full suite of services gives you more than just tax prep software
- Good exchange rate management system for those trading in multiple currencies
- Could require a lot of tweaking within the software to make it right for an active trader
- Busy traders may appreciate a solution that’s ready out-of-the-box
9. Liberty Tax
One of the nice things about Liberty Tax is that you can either opt to use their online service or have one of their professionals do it for you. If you opt for the online option, then you’ll have to pay for the Premium Edition of the tax service to get the forms and schedules needed to report your income. Liberty offers a 100% guarantee and promises to get you the maximum refund, even on complicated investment returns.
- Lots of online resources to answer tax questions as well as in-person help available in their branches
- Software can be complicated, so best left to the trader who is comfortable filing on their own
- Traders will need the Premium edition, which is more expensive than some other options
TaxSlayer is one of the newer names on this list, but one that’s quickly becoming popular do to their well-designed software and competitive pricing. If you are comfortable doing your taxes yourself, this can be one of the least expensive options available. The affordable Classic package will only set you back $17, but you won’t get any TaxSlayer customer support. If you would rather have access to one of their tax professionals, it’s still a reasonable $37.
- One of the least expensive options for filing your taxes as an active trader
- Classic package has no restrictions on forms, so it’s suitable for all tax situations
- One of the lesser-known companies on this list, but definitely making a name for themselves when it comes to tax prep
Which Tax Service for Day Traders Will You Use This Year?
Not sure which software is right for you? Most of the tax software on this list allows you to do your taxes before you pay for the service or officially file. Take advantage of that and use a few to see which one actually comes up with the biggest refund (or smallest payment due). The only thing you’ll lose out on is a bit of your time, and you may end up finding a tax service you love. Look for one that largely automates the process of reporting and filing your taxes so you can focus on trading instead of a big tax bill.