Estimated tax payment rule

ElectricSavant · Mar 9, 2005

Thats why I said if your self empoyed

Put as much of your self employment income that you can in your SEP...

Up to 25% of compensation, as much as $41,000 for the 2004 plan year and $42,000 for the 2005 plan year. The contribution is based on the net profit from the business (not the gross income). Calculating the maximum allowed requires you to compute the self-employment tax first. This seems to be the formula, where "CR" is the contribution rate, like .15 for a 15 percent rate or .25 for the maxrate:
CR * ( ( Schedule C profit - ( 0.5 * Shedule SE tax )) / ( 1 + CR ) )

Michael B.

Quote from sprstpd:

I always thought that trading income was not considered "earned income" and therefore you cannot contribute to a retirement account. On the other hand, you do not have to pay social security or medicare taxes.

ElectricSavant · Mar 9, 2005

All profitable Retail traders should get a side business that the IRS will not consider a hobby, was my point.

Michael B.

P.S. For those of you interested, You can wait until April 15th to make you contribution, just like the traditional IRA. And you can have both the SEP and the traditional. Remember that the 2005 contribution limit is 4k not $3,500.00 and of your over 50 its now $4,500.00 for the traditional not $3,500.00. If you max that out then get a SEP, you self employed people!

P.S.S. For you pro traders that elect to turn your trading into a business, well contact Greentree...(hint: wait until you make 100k a year in trading profits before you think about this)

sprstpd · Mar 9, 2005

Quote from ElectricSavant:

All profitable Retail traders should get a side business that the IRS will not consider a hobby, was my point.

Ah ok. So a 2nd business besides trading so that you can have earned income and a retirement account. Sounds good. Now if only I could find a side business.

murray t turtle · Mar 9, 2005

Quote from OptionsWizard:

My main advice on taxes for traders is to get professional help.
http://www.greencompany.com is a great place to start. Most chances your regular CPA doesn't know too much about it (like mine)

To your question, futures are considered "1256 contracts" and are reported on form 6781 and then quoted on schedule D. The 60/40 rule applies, which means that 60% of your gains are reported as long-term and 40% as short-term.

************
Not tax advice;
it pays to get a pro.

Billytrader;

-You probably [key word probably???] dont owe any fed income tax tax on $7oo???;
because ;

trading books, pens ,notebook paper... exspense perhaps???

business use of your home[ fedspeak] form 8829

fedspeak again -depreciation not included in part 111

However you may still owe Self-employment tax [schedule SE].

Also respectfully disagree IRS is ''just like a loan @6%;
IRS has much more punishment power than bank /mortgage co.

In all labor there is profit.
Solomon, trader/investor king

Free Thinker · Mar 9, 2005

Quote from OptionsWizard:

My main advice on taxes for traders is to get professional help.
http://www.greencompany.com is a great place to start. Most chances your regular CPA doesn't know too much about it (like mine)

To your question, futures are considered "1256 contracts" and are reported on form 6781 and then quoted on schedule D. The 60/40 rule applies, which means that 60% of your gains are reported as long-term and 40% as short-term.

i have talked to greencompany. he would like to come back to elite and give us tax advice if he were asked. it seems the resident tax expert that we have now hardly ever is around.
some of you may remember green used to post here until there was a disagreement with management over advertising. i think if enough people complained we could get him back.

ElectricSavant · Mar 9, 2005

Out of all the people to disagree with a Traders Tax expert is not one that ET should disagree with. But, I do not know the details and I am just a guest here.

But if it were me.... to help the community and to further the growth of ET, I would invite Green back and offer him free advertising!

But his use of time would be appreciated and better used if he would attempt to answer questions in detail ON THE BOARDS, instead of just call my office...

Many of us like to do our own taxes and study the details ourselves and his help along the way would be great. So many of us our conditioned to "NOT UNDERSTAND" and let the CPA do it. ET is for learning not just advertising. I find being familiar with my taxes, helps me be more involved with my planning and strategy for the new year. We must understad Tax Law in my opinion...

It's amazing how many traders do not consider taxes when collecting income or paying expenses in their trading business...You should treat trading as a business and plan accordingly.

Michael B.

OptionsWizard · Mar 9, 2005

vhehn,

This is a great initiative!

Last year was my first year as a trader and I was clueless. On April 10, I almost signed my tax return made by my regular CPA, when I "stumble" across Green web site.
I downloaded the tax guide (~$50) and immediately understood how ignorant I was in trader tax issues.
I signed up for 30min phone consultation with Robert Green. he convinced me to file for extension and gave me numerous good advice. That year I saved over $5,000 in taxes!

sulli · Jan 11, 2007

Quote from ElectricSavant:

But if it were me.... to help the community and to further the growth of ET, I would invite Green back and offer him free advertising!

Out of all the people to disagree with a Traders Tax expert is not one that ET should disagree with. But, I do not know the details and I am just a guest here.

Well, now your a mod!

Do you have any say in what goes on here? Or did you just get a free T-shirt and travel mug in exchange for removing spam?

grandpa · Jan 11, 2007

Quote from ElectricSavant:

Out of all the people to disagree with a Traders Tax expert is not one that ET should disagree with. But, I do not know the details and I am just a guest here.

But if it were me.... to help the community and to further the growth of ET, I would invite Green back and offer him free advertising!

But his use of time would be appreciated and better used if he would attempt to answer questions in detail ON THE BOARDS, instead of just call my office...

Many of us like to do our own taxes and study the details ourselves and his help along the way would be great. So many of us our conditioned to "NOT UNDERSTAND" and let the CPA do it. ET is for learning not just advertising. I find being familiar with my taxes, helps me be more involved with my planning and strategy for the new year. We must understad Tax Law in my opinion...

It's amazing how many traders do not consider taxes when collecting income or paying expenses in their trading business...You should treat trading as a business and plan accordingly.

Michael B.

The electricsavant has tremendous mental issues. This is his therapy. The guy is inches away from total breakdown, the market keeps him sane. He is trading one lots in a mini account and reporting on it, he shoud not be a moderator on this site. Pray for savant, and his made up wife.
I am grandpa and am very concerned.

Grandpa