I'm somewhat new to day trading, but I've made decent returns by trading ETFs on Robinhood.
My accountant has warned me that daytrading increases my risk of an audit by the IRS, simply because of the sheer number of trades and possible discrepancies in how a trade is classified (apparently there is short term, long term, and everything in between). Over the course of 8 months I've conducted maybe 30 trades.
Is the risk of an audit realistic or is my accountant just trying to avoid the extra work of computing the tax owed on each of these trades? I'm a little bit suspicious because 1) my accountant hadn't even heard of Robinhood, and 2) he has said in years past not to reinvest dividends in stock because the "math is too hard."
What do you guys think?
My accountant has warned me that daytrading increases my risk of an audit by the IRS, simply because of the sheer number of trades and possible discrepancies in how a trade is classified (apparently there is short term, long term, and everything in between). Over the course of 8 months I've conducted maybe 30 trades.
Is the risk of an audit realistic or is my accountant just trying to avoid the extra work of computing the tax owed on each of these trades? I'm a little bit suspicious because 1) my accountant hadn't even heard of Robinhood, and 2) he has said in years past not to reinvest dividends in stock because the "math is too hard."
What do you guys think?
