There are not many sources available that publish information for filing taxes for commodity traders. I did come across a source from W&A Publishing that gives some good guidance specifically for filing taxes for commodity and stock traders.
Trader Tax Status
One of the biggest benefits comes from being able to file with a trader tax status. The book gives you a good explanation as to who can file with a trader tax status. You really need to be a full time trader in order to do so. It can save you a lot of money, as you are able to basically deduct all of your trading expenses – home office, computers, software, broadband, education, data sources, etc. You also have the luxury of carrying back net operating losses, which could save you quite a bit of money.
Filing as a Business Entity
The book also gives you some good advice on whether you should create a business entity for trading, as well as the benefits and disadvantages of each type of entity – LLC, S-Corp, C-Corp, etc. You are also able to file as a self-proprietor and it is not necessary to for an entity.
IRS Red Flags
Another good topic deals with red flags that catches the attention of the IRS and increases your chance for an audit. The author mentions that the home office expense is not the red flag it was years ago. Large, profitable accounts have less issues when writing off a good amount of expenses, but small accounts have to be more careful.
More Information on Tax Guide
This publication comes in electronic format (PDF), so you can download from your computer and receive it quickly. The author, Robert Green, from Green & Company CPAs, is a popular author in the field of taxes that relate specifically to commodity, futures, stock and forex traders.
This guide is quick and to the point, which I always appreciate. There is not a lot of tax or legal jargon nor is not a time consuming read. The book is 20 pages long in PDF format. It might seem to be short, but it covers most of the issues you will encounter while filing taxes from trading commodities.
