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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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.