 Hey navigation traders. I want to take a few minutes to go over a few tips that I've learned over the years for trading and Taxes so quick disclosure navigation trading. It's affiliates. We do not provide tax legal or accounting advice This information is prepared for informational purposes only be sure to consult your own Tax advisor as it relates to any of this information. We're gonna cover a few things in this short video One we're gonna go through the tax center of thinkorswim and tasty works show you where to find your forms deadlines all that good stuff We're gonna talk about the 2018 capital gains rates What is section? 1256 there are specific symbols and contracts that have a little bit different tax treatment and then if you are in a Position to elect trader tax status will give you some resources for that as well So let's start with the tax centers and let's start with TD Ameritrade Once you log in you're just simply going to hover over my account and there's this button that says tax center So go to the tax center and this is gonna give you all the forms that you need For filing your taxes. So if you trade futures, there's going to be a futures 1099 be you're definitely gonna want that one And then you're consolidated form 1099 So from typical Brokeage or bank accounts that are in interest. Those are typically kind of the only two that you need But in the case of trading the way that we do there's some additional Information that you're gonna need if you do your own taxes or if you have somebody do your taxes here are the documents You need so we're looking at the tax year of 2018. So there are two different documents here One is all your transactions with wash sale adjustments and one is without wash sale adjustments So when you open one of these up what I like to do is Go ahead and Save this as an Excel spreadsheet Okay, you can save it as a PDF or Excel But I don't do my own taxes and I send this information to My accountant and my accountant likes it in the form of an Excel spreadsheet so that they can then reconcile and sort it how they need to to get the actual Numbers and data that they need to file accurately So for the wash sale with and without wash sale I would save those to an Excel and then just email them to your accountant So that they can do their whatever it is that they do with that stuff. I'm a numbers guy But I still do not do my own taxes. I let someone who knows what they're doing do that So that's what I do if you do your own taxes and you can utilize that That's where you want to find that in the TD tax center. All right, so that's TD. Let's go to tasty works and Very same situation. You're just gonna log in go to their home page hover over my accounts and go to tax center And it's gonna be the exact same information So you're gonna have your consolidated 1099 form if you trade futures, you're gonna have your 1099 be futures Form and then you're with and without wash sale Spreadsheets right there a couple dates to be aware of some of the brokers do these in Tronches, so you'll see that you know February 7th is kind of the first 1099 run that they'll be releasing If yours isn't available by then what you'll see is by February 15th. You'll have that available Both both brokers also have the ability to export your data if you're doing it yourself to turbo tax H&R block tax act trade log and potentially a variety of other ones So that's how you get the forms that you need the next thing I want to talk about is 2018 capital gains rates So this is gonna set up for the 1256 contracts on the next slide But basically I want to make sure you understand so there is short-term capital gains Which is just taxed at your ordinary income rate, you know So depending on what tax bracket you're in and then there are long-term capital gains The difference is short-term capital gains are taxed at ordinary income so whatever tax bracket you fall in that's the amount of tax you'll pay and Short-term capital gains are based on profits from an asset held less than 12 months So most of the trading that we do is held for less than 12 months Even if we're rolling a position for several cycles and we ended up being in it for longer than 12 months Remember a roll is essentially Closing out one position and reopening it in the next cycle. So those are all still Considered short-term capital gains and those are the different tax brackets that you might fall into based on your overall income and Your filing status. So if you're single or you file joint or head of household or whatever it is That's going to position you in one of those tax rates Now long-term capital gains are for profits from assets held more than 12 months So let's say if you have stocks in your portfolio And you've been holding those for longer than 12 months and then you sold them in 2018 Those are going to fall under the long-term capital gains rates Which are typically lower and you can see there's three different brackets 0% 15% or 20% and Again, you'll need to just figure out based on how you file and your income level Which of those brackets it would fall into for you now keep in mind If you bought a stock and you're still holding it You're not going to pay any tax on those gains So if you bought Walmart stock for a hundred dollars and now it's at a hundred and forty dollars So you've got an unrealized profit of forty dollars The thing to remember is those gains are unrealized You don't pay tax on that stock gain until you cash it out So keep that in mind. These are only based on profits from realized gains that these Pertain to now the reason I wanted to go over the short-term and long-term capital gains is because there are some Contracts that fall into what we call section 1256 and those receive a 6040 tax treatment meaning 60% of the gain that you receive is taxed at that lower long-term capital gains rate 40% of the gains are taxed at the short-term capital gains rate Now this goes for most of your futures contracts as well as some of these Indices now these ones here are ones that I trade These I never trade But just wanted to give this list to you to give you an idea of which of these contracts fall under the section 1256 and Receive that more favorable tax treatment and that's why you know a lot of people trade SPX and RUT and NDX and VIX is because of that favorable tax treatment You don't get the same tax treatment on SPY or IWM or QQQ Because those are actual ETFs and they're treated just like an individual stock But on these indices SPX RUT and DX DJX or VIX They get the 6040 tax treatment. So keep that in mind and again if your accountant does your taxes for you They should know all this stuff, but it's not a bad idea to make sure that that is the case And the last thing I want to talk about is trader tax status So IRS has an election code 475 F which actually allows you to file or elect to be a full-time trader or elect your status to be trader status and I give you some bullet points here just to give you an idea of do you or do you not qualify in the first place and Then from there you can decide if it makes sense for your particular situation If you want to elect trader tax status or not So let's run through these real quick if you trade full-time or part-time for a good portion of the day Almost every day that the markets are opened. Okay. That's point number one holding period Is the most important factor in in the court and the IRS said the average holding period must be 31 days or less Okay, so if you're just buying things and holding them long-term investing, that's not trader status Okay, they want to see that you're more of a shorter term Trader and this is this is something that you do actively and obviously the way that we trade at navigation trading Would certainly qualify under this rule Volume you make 700 total trades per year on an annual basis. That's about four trades per day four days a week 16 trades per week 60 trades a month. Okay, so it do you have that kind of volume of trades? Next frequency Executes trades on close to four days per week every week. Okay, so that's four out of five days Are you placing trades and then as far as proceeds has proceeds in the millions of dollars per year on equities? Hours spends more than four hours per day No sporadic time lapses so has few to no sporadic lapses in trading business during the year And then your intention has the intention to run a business and make a living with your trading Operations has significant business equipment Education business services and a home office, so you know significant is a little bit of a gray area But I mean that could be a computer Do you spend money on education so forth and so on and then account size again a very gray area? But someone who has a material account size now I got all this information off of green trader tax.com. They've been around a long time They're an accounting firm that works specifically with traders and so they've got a lot more information about this I just wanted to give you a quick group of bullet points to give you an idea of does it even make sense for you to? Explore this idea. I will tell you Based on my situation and we've got a couple different businesses real estate additional income You know obviously we trade it didn't even make sense for me to take on trader tax status And just from a standpoint of it didn't save me I was better off from a taxable income standpoint not electing trader tax status And so you're just gonna have to figure it out for your specific situation if it makes sense for you All right, so I hope that was helpful again Please consult your tax advisor tax consultant if you have any additional questions on this We are not tax advisors But just wanted to give you this bit of information to get the juices flowing as we approach our tax deadlines Happy trading