This is one of the reasons I like trading an IRA. There are no tax issues like this, and taxes on profits are deferred into the distant future.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Serious Tax Issue
- Thread starter Matix04
- Start date
Quote from TraderZones:
This is one of the reasons I like trading an IRA. There are no tax issues like this, and taxes on profits are deferred into the distant future.
Some off topic questions, related to your comment:
1. How do you take money out from an IRA?
2. What are the limits on funding an IRA - how do you get it to the 25,000 PDT limit, to start with?
Thanks
Quote from TraderZones:
This is one of the reasons I like trading an IRA. There are no tax issues like this, and taxes on profits are deferred into the distant future.
Question about IRA-if i'm unemployed trader,making 200-500K a year, i cannot deduct my contributions, right?
but i can open an IRA account and put some money in it? looks like it's 5K for 2008-2009.
now here is my question-i open an IRA account ,but put 50K in it, make another 50K in trading profits by end of the year, then withdraw 45K from initial 50K. so my contributions for year still 5K, but what about profits? is there any taxes on it?
Thank you!
Quote from Bob111:
Question about IRA-if i'm unemployed trader,making 200-500K a year, i cannot deduct my contributions, right?
but i can open an IRA account and put some money in it? looks like it's 5K for 2008-2009.
now here is my question-i open an IRA account ,but put 50K in it, make another 50K in trading profits by end of the year, then withdraw 45K from initial 50K. so my contributions for year still 5K, but what about profits? is there any taxes on it?
Thank you!
The profits are tax deferred in a trad'l IRA. I believe if its a ROTH IRA, you won't have to pay taxes on the profits since you contribute after tax dollars into it.
Quote from jumper:
The profits are tax deferred in a trad'l IRA. I believe if its a ROTH IRA, you won't have to pay taxes on the profits since you contribute after tax dollars into it.
Thank you,i see... so it should work like in example here?
http://www.retirement-income.net/ira-tax-brackets.htm
but what about moving large amount of money into IRA during the year and then withdraw them? shouldn't be a problem?
Thank you!
Quote from telozo:
Some off topic questions, related to your comment:
1. How do you take money out from an IRA?
2. What are the limits on funding an IRA - how do you get it to the 25,000 PDT limit, to start with?
Thanks
I would suggest you do some self-study on IRAs. This for example, is the IRS site on IRAs: http://www.irs.gov/retirement/article/0,,id=111413,00.html
And you can also ask brokers that you use (stock, futures, etc.) about what is involved in trading an IRA - they can answer some questions to get you started.
Quote from Bob111:
Question about IRA-if i'm unemployed trader,making 200-500K a year, i cannot deduct my contributions, right?
You probably would want to do a Roth anyway - they are not deductible, but when you withdraw them tax free.
but i can open an IRA account and put some money in it? looks like it's 5K for 2008-2009.
If you have retirement plans from past companies, you can also roll over 401K money into an IRA.
now here is my question-i open an IRA account ,but put 50K in it, make another 50K in trading profits by end of the year, then withdraw 45K from initial 50K. so my contributions for year still 5K, but what about profits? is there any taxes on it?
Thank you!
All money you withdraw from a traditional IRA is taxed - that is the whole point.
Money properly withdrawn from a Roth IRA during retirement yearws is not supposed to be taxed, whether it came from your contribution or profit, it does not matter. But I cannot say anything about early or same year Roth withdrawals - I do not know.
Questions like this are usually better directed to your CPA or financial advisors (especially if you have $200-$500K a year - you need to get good and proper advice, not from anonymous forum posters.) This is rather penny wise and pound foolish...
Bob,
Read the phase outs for Roth IRA's given your current income. Once you start making a higher income your ability to fund a ROTH IRA phases out. It's easy to find just google...
Read the phase outs for Roth IRA's given your current income. Once you start making a higher income your ability to fund a ROTH IRA phases out. It's easy to find just google...
OP, I have sympathy for you. The situation is an unfair byproduct of a tax code that was not designed to take into account the reality of traders. There are a bunch of employees of dot com companies during the dot com boom-and-bust who went through similar situations because of the stock options they held