The #1 Tax Strategy For Day Traders

In this video, Toby Mathis breaks down what truly defines a day trader, why the IRS makes this classification so complicated, and how the facts-and-circumstances test has shaped the tax landscape for traders.

Because there’s no clear tax code defining trader status, many people end up in court simply trying to prove they qualify.

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Toby explains the real tax difference between investors and traders, including how investors are limited under Section 212 after the Tax Cuts and Jobs Act eliminated most miscellaneous itemized deductions.

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Investors can only write off margin interest up to their investment income and have very few opportunities for additional deductions.

Traders, however, operate under Section 162, which allows them to deduct ordinary and necessary business expenses—opening the door to far more powerful tax advantages.

You’ll learn why traders began filing Schedule C, why the IRS frequently audits sole proprietors, how capital gains and losses impact both investors and traders, and what happens when traders try to claim expenses in the wrong place.

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Show Notes:
0:00 Intro – #1 tax strategy for day traders
1:00 Investors vs. traders and key tax differences
2:20 Schedule C vs. Schedule D and audit risk
3:30 Capital gains, capital losses, and the $3,000 limit
5:31 Mark-to-market election (Section 475) explained
8:31 How to qualify as a trader – the 3 main tests
12:08 The loophole: C corporation + LLC family office structure
15:05 Asset protection, tax savings, and legacy benefits
16:50 Free tax and asset protection training + closing call to action
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ABOUT TOBY MATHIS
Toby Mathis, Esq. is the best-selling author of Infinity Investing: How the Rich Get Richer And How You Can Do The Same. Toby is a tax attorney and founded Anderson Business Advisors, one of the most successful law, tax, and estate planning companies in the United States. Learn more at https://aba.link/tobyaba
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The information provided in this video should not be construed or relied on as financial, investment, or legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.

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