Do traders who trade everyday & make their living off trading and fit all the other IRS criteria for being a trader, BUT trade their own money & not thru an LLC or any organization, have to pay FICA & Medicare taxes? How about Self Employment taxes?
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if you fit all the IRS criteria of a trader but you trade your savings & not an entity, FICA taxes?
- Thread starter David Donner
- Start date
In most cases NO for FICA/SE Taxes, exception for futures exchange members. YES for Medicare taxes for earnings above 125,000 for single or 250,000 for married filing jointly.
What about the fact that the investment gains are not passive, but are actively worked every trading day of the year with substantial trading activity? Does that trigger FICA or Self Employment taxes?
No. You can read Green trader tax blog for more info.
Trading income is not earned income.What about the fact that the investment gains are not passive, but are actively worked every trading day of the year with substantial trading activity? Does that trigger FICA or Self Employment taxes?
Straight from the source. From the third topic on this, "Traders". Very last sentence in that topic. "Gains and losses from selling securities from being a trader aren't subject to self-employment tax."
https://www.irs.gov/taxtopics/tc429
https://www.irs.gov/taxtopics/tc429