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Level 1
posted Apr 19, 2022 4:59:25 PM

How to claim day trading losses as a full-time day trader?

This is the first year that I am filing as a day trader and filing my trading income as business income.  This year my income from day trading is negative.  How do I write off the losses from my day trading?  When I input the information from my T5008 will it automatically calculate my losses and write them off against my other income or is there somewhere else that I need to input the losses?

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13 Replies
Level 3
Apr 20, 2022 8:12:17 AM

When you report losses from day trading you will need to report the loss as a business loss separately from your T5008. As day trading losses are fully deductible against employment income, it will only lower taxes payable. Business losses are also fully deductible against other sources of income.

 

For more information please refer to the following TurboTax article:

Thank you for choosing TurboTax

Level 1
Apr 20, 2022 12:57:13 PM

So I would still include the T5008 and report the loss somewhere else?  Where do I report the loss, i.e. what form do I use? 

Level 1
May 2, 2022 11:44:46 AM

The article in the link only explains filling out the T5008.

I have run into the same situation and I am trying to understand how to fill out the T2125 as it relates to reporting a loss.

If I report income (sale of investments) and expenses (purchase of investments) it calculates the loss correctly. Problem - CRA now wants me to register for GST since the Gross Income (sale of investments) exceeded $30,000.

 

 

Returning Member
May 11, 2022 9:41:36 AM

Im also interested in this, the article mentioned does not lay out the full steps on how to report losses. when i enter all the T5008 slips, it automatically considers them as Capital Gain (losses). How do i change it to business income or loss?

Returning Member
May 11, 2022 9:42:10 AM

Im also interested in this, the article mentioned does not lay out the full steps on how to report losses. when i enter all the T5008 slips, it automatically considers them as Capital Gain (losses). How do i change it to business income or loss?

Level 15
May 17, 2022 6:21:03 AM

As a day trader your income is considered business income. Therefore you will report your income under the T2125- as a business income. In the Business section you will be able to enter your profit or losses. If its a negative it will reduce other source of income. There is no capital gain as  a day trader. 

 

As a trader you can claim business expenses.

 

You will not enter your T5008 slips- only report your income on the T2125.  

 

 

Thank you for choosing TurboTax.

 

 

New Member
Mar 8, 2023 6:38:21 AM

Hi, 

 

Even though this makes sense, it still difficult to see where we would put the losses. I can put some of the losses in the expense part but the actual sale losses it does not give you an option ... unless I'm missing it. Could you let us know where exactly the loss of sales would be entered? 

Level 15
Mar 15, 2023 12:07:42 PM

If you have a T5008 the amounts of loss will be listed. 

New Member
Mar 15, 2023 12:15:10 PM

Yes, but I don’t want to list it as a capital loss nor investment. So even though it list the loss, it doesn’t reflect the day-trading part of business loss. I want to know where the negative value of the business loss would be entered.

 

thank you for responding !

Level 15
Mar 23, 2023 10:29:03 AM

As a full time day trader you should have received  T5008 slips which will show your profits or losses from securities you sold during the year. You will enter them and continue as the instructions on the following TurboTax article: How do I report income made from day trading?

 

Thank you for choosing TurboTax.

New Member
Mar 25, 2023 3:53:48 PM

Turbotax people. What we need to know is how to report the daytrading loss on the T2125 form.

In short, for people with a net LOSS daytrading, we should be entering a negative amount on line 3A, but Turbotax does not allow us to enter a negative amount. How do we report this net loss with Turbotax?

Level 1
Mar 28, 2023 8:39:46 PM

Please follow the link you provided.  You cannot enter day trading business losses from this link, if you can please provide more detail because I am missing it.

Level 15
Apr 4, 2023 7:17:29 AM

To report those stock trading transactions for income tax purposes, as anyone will note you cannot report negative income for "Gross Sales, Commissions or Fees...", that is because you are "Trading".  Consider the financial asset as you would any other capital asset being bought and sold as a business, which is reported in the Cost of Goods Sold section of the T2125, as well as for your records in bookkeeping.  There would be an Opening Inventory, Purchases, Direct Wages costs, Subcontracts, and Other Costs, all of which sums to an overall Cost of Goods. Next you determine the value of your Closing Inventory.  The difference from your Cost of Goods and your Closing Inventory determine if you had a Profit or Loss in your trading. For reference, please review “Part 3D – Cost of goods sold and gross profit” in the guide T2125 “Self-employed Business, Professional, Commission, Farming, and Fishing Income: Chapter 2 – Income”.  See: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002/t4002-4.html#...

 

Note, there are special considerations and treatment for assets ("stocks") being brought into the business as opening inventory.  Additionally, I would like to re-emphasize the importance treating this endeavor as any other business trading in goods, where you would maintain accurate records and bookkeeping of all transactions, as well as a log of your time allocated to this business activity. Should you receive a Supplemental Review request or an Audit from the CRA to substantiate your declarations, including claims of a loss, these records would be essential in  your reply.

 

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