You might want to let readers know that you can't use TurboTax to file taxes as a trader. I just tried and it won't work. The reason is that the Schedule D will only handle numbers up to $9,999,999. A daytrader has bigger numbers than that. I called TurboTax, and they said I need to use TurboTax professional series to handle numbers that big. You can't buy it in a store -- you have to get it from TurboTax. The cost isn't that much ($50), but it sure is a hassle to have to start over.
-- Vern Hehn
Are daytraders really reporting numbers that big on their tax returns? Boy, am I in the wrong business.
Thanks for pointing out the limitation, though.
Intuit confirms that TurboTax won't let you report net capital gains of $10 million or more on
-- Capital Gains
. That limitation also applies to the reporting of individual trades in excess of $9,999,999.
What's more, the total number of trades TurboTax can handle is around 68,000. That's about 262 trades for each day the market is open. (Please tell me that's enough.)
That doesn't mean that
traders can't use TurboTax -- just the ones with trade totals up in the stratosphere.
version of TurboTax -- which is designed for professional tax preparers -- can handle dollar amounts in the tens of millions, but the cost is prohibitive for individuals, about $1500, says Intuit spokeswoman Jennifer Roberts.
For most daytraders, that's not the answer. But tax preparation services that offer a live-preparer option, like
Taxes4Less.com, may be an alternative. Since real people actually prepare your return, you don't have to worry about software limitations.
Stay away from e1040.com's online product though. You're limited to a measly four transactions each for short-term and long-term trades.
TurboTax isn't the only site with software constraints.
TaxAct have the same $9,999,999 limitation on the value of individual trades and net capital gains. TaxSaver doesn't limit the number of trades you can enter, but TaxAct caps it at a relatively low 196 trades.
H.D.Vest, the free online tax preparation site, has a 10-digit limit on the numbers you can report. That's a shade under $10 billion, in case you're wondering. There is a 99 line-item limit on your Schedule D, though.
Check out our
online tax chart for more information on all the sites discussed above.
But remember, regardless of the number of trades you report in an online tax preparation product, the
Internal Revenue Service
limits the amount of trades it will accept from an electronically filed return.
Back in February, we
reported that only 97 trades were allowed on Schedule D on an e-filed return. That was what the IRS told us.
But Bob Meighan, Intuit's vice president of tax, emailed to say that "the IRS actually allows 97 short-term
97 long-term Schedule D transactions. Therefore, you can report a maximum of 194 Schedule D transactions on an electronically filed return."
I called the IRS back. Initially, this was news to them. But after much research they confirmed the figures in Meighan's email.
Thanks Bob. At least someone out there knows what's going on.
Need Spreadsheet Help
I pulled this question off the Tax Forum message board:
I followed Gary B. Smith and Helene Meisler and had a great year trading. I have all of my trades in an Excel spreadsheet. I had hoped to import my Excel data into TurboTax, but that seems impossible. Is there any way to get my 120-plus trades into TurboTax without manually entering each one? -- nakaoo
Seems like everyone had a good year trading.
I'm sorry to say that you can't import Excel spreadsheets into any tax product -- TurboTax included. These tax products can import/export only files that end in .txf. That includes files from personal finance programs like
, but excludes Microsoft Word documents and Excel spreadsheets.
Aside from using one of the live-preparer options mentioned above, you can always enter the totals of your proceeds and cost basis from trading activity on Schedule D and write "See attached Statement 1." Then print out your spreadsheet, label it "Statement 1" and attach it to your tax return. You'll have to mail in your return though.
See this previous
story for more details on how to attach a schedule to your tax return.
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TSC Tax Forum aims to provide general tax information. It cannot and does not attempt to provide individual tax advice. All readers are urged to consult with an accountant as needed about their individual circumstances.