Personal Finance & Money Asked by Options Trader on January 19, 2021
I only trade options. Nothing exotic but just buying and selling CALLS and PUTS.
So for example if I lost 30,000 USD trading options for the 2020 Tax Year. In 2021 I go on to profit 40,000 USD. Does this mean I can offset 30,000 from previous years losses and only owe taxes for 10,000 ?
For 2020, if you had no gains to offset, you would take $3000 against ordinary income.
Then $27,000 is carried forward and would offset up to $27,000 of gains.
Answered by JTP - Apologise to Monica on January 19, 2021
The annual deduction for losses is $3k so your carryover loss from 2020 would be $27k which would offset $27k of gains in 2021.
However, if you qualify for Trader Tax Status, the $3k annual limit does not apply. Read this if interested in more details.
Answered by Bob Baerker on January 19, 2021
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