Commissions Tax Question

[Tattertots 10]

I am a retail stock trader on Scottrade. Last year I paid over $4k in commissions.

 

How do I deduct those from my tax payment?

 

thanks

[TraderJen 10]

I am a retail stock trader on Scottrade. Last year I paid over $4k in commissions.

 

How do I deduct those from my tax payment?

 

thanks

 

"The commission you pay when you buy stock isn’t deducted as an itemized deduction when you file your tax return. But that doesn’t mean you don’t get a tax benefit for paying a commission when you purchase some stock. The commission that you pay gets added to the rest of the cost of the stock and becomes part of the stock’s basis. The basis is the amount you use to compute your gain or loss when you sell the stock." from http://www.funwithtaxes.com/Past_Articles/3_06_00.htm

[brownsfan019 17]

It can also depend on whether you are buying/selling as a hobby or as a business. Full-time traders whose sole income is trading can get other deductions.

 

Consult a tax pro w/ any serious questions though. Don't need Mr. IRS knocking on the door one day b/c someone on an internet board told you what to do.

[Cruiser 10]

Just to clear this up a little: For most of us the commissions are deducted from your capital gain (added to your loss). You do this by adding the buy commission to your cost and subtracting the sell commission from your proceeds of each transaction when filling out your form 1040 Schedule D.

 

For example if you bought one share for $100 and sold it for $200 and had a $10 commission on both the purchase and sale of the shares you'd report it as follows:

 

Sales Proceeds - $190 ($200 less $10 commission)

Cost basis = $110 ($100 plus $10 commission)

Net gain = $80