Professional data fees are not a small cost. My preference is to not form an entity, and pay non-professional data fees. The income I earn from trading is considered unearned income and does not incur social security taxes. However, that means I won't get any social security benefits. Personally, I'd rather save for my own retirement rather than rely on a government program that is unsustainable. Note that you can be a non-professional (i.e., no entity) and still get trader tax status. Green details reasons why this might not be an optimal path, but it has worked for me.
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Is Trader Tax status worth it?
- Thread starter Steven W
- Start date
Professional data fees are not a small cost. My preference is to not form an entity, and pay non-professional data fees. The income I earn from trading is considered unearned income and does not incur social security taxes. However, that means I won't get any social security benefits. Personally, I'd rather save for my own retirement rather than rely on a government program that is unsustainable. Note that you can be a non-professional (i.e., no entity) and still get trader tax status. Green details reasons why this might not be an optimal path, but it has worked for me.
Professional data fees are not a small cost. My preference is to not form an entity, and pay non-professional data fees. The income I earn from trading is considered unearned income and does not incur social security taxes. However, that means I won't get any social security benefits. Personally, I'd rather save for my own retirement rather than rely on a government program that is unsustainable. Note that you can be a non-professional (i.e., no entity) and still get trader tax status. Green details reasons why this might not be an optimal path, but it has worked for me.
That path worked for me too, for a few years early on.
With intent to broaden knowledge, not argue... earned income unlocks a whole world way beyond participation in government sponsored social programs which may or may not be available when needed. In addition to a simplified way of life via mainstream "proof of income" documentation, certain benefits surrounding retirement and health, in particular, become available, many with eligible costs being deductible. Other non-taxable benefits to the individual may become available as well. Well worth mentioning but not directly associated with earned income... depending on entity structure, "distributions" free of SE-tax, and in some cases even tax-free, may be available.
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Would someone who is already on Medicare and collecting social security still have to pay the SE-tax for these two items?SE-tax
If you make more than a de minimis amount then yes, you still have to pay SS tax. Of course if you make more than a de minimis amount you cap out and stop having to pay SS tax (anything over $132,900 this year), so since it's not marginal it really doesn't matter much if you're in a position to be having this discussion in the first place.Would someone who is already on Medicare and collecting social security still have to pay the SE-tax for these two items?