Many first-time investors who jumped into the 2020 bull run are now finding themselves drowning in tax time paperwork — as could be any newbies who joined this year’s GameStop frenzy or bitcoin bonanza for next year’s tax return.
Every time a trader sells a stock or cryptocurrency it counts as a taxable moment. Because these traders may move in and out of different stocks and coins several times a week or day, they can be surprised when hundreds of pieces of paper arrive at their door. The IRS wants a peek, and may want a cut, of all of it.
“My Robinhood tax form for 2020 is 374 pages. Day trading is fun,” said Mike Ziemer, 35, a marketing and music entrepreneur from Dallas, Texas, in an online message. When the pandemic shut down his live event business he pivoted to day trading. The gains let him pay his bills and build a recording studio, but now he has to dump hundreds of extra pages on his accountant.
“I did let him know in advance that I survived through 2020 day trading and that my tax forms would be more complicated,” Ziemer said. “I just received them last week, so he’ll be getting all of them this week.”
The stock market run, with the S&P 500 ending the year up over 16 percent, paid handsomely for those with the right timing and stomach, drawing in players from all walks of life from farmers to engineers to the bored and laid off and desperate…