If you can’t do that yourself you definitely need an accountant. Your rates won’t change much because of an accountant; they ensure your taxes are filed properly so that you don’t screw it up and pay more.
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Tax Acct - Green Trader Tax vs Trader Tax CPA
- Thread starter fishindamarket
- Start date
If you can’t do that yourself you definitely need an accountant. Your rates won’t change much because of an accountant; they ensure your taxes are filed properly so that you don’t screw it up and pay more.
Can you give a ballpark number of the percentage of the tax per trading profit that Green Trader estimate for you (after all deductions)? For example, you make $100,000 and Green Trader calculate your tax is $30,000. So it is 30%. I just want to see some rough ideas of traders that work with them to see if it is worth to pay them.
It (trader taxation) doesn't work that way.
Firstly, unless a trader and/or a trading entity qualifies for TTS, the entire issue is moot... you are an hobbyist investor in the eyes of the IRS, period.
Secondly, choice of entity, if any, plays into the issue. For instance, a c-corp forfeits the tax advantages of section 1256 instruments. Also for instance, a c-corp pays a "corporate" tax directly, as well the possibility of paying dividends which may be taxable to a shareholder creating double-taxation. Counter to that, pass-through entities pass-through NET gains, losses, incomes, deductions, and cost basis factors to its members/shareholders/partners, and furthermore, can make "distributions" potentially fully tax-free.
Also keep in mind, traders don't have a lot of expenses. For instance, unless you have clients, a car is likely not deductible, even if titled in a trading entity. However, there may be occasional mileage/travel expense reimbursements or deductions.
Bottomline, TTS gets you to a place where you can begin to "engineer" aspects of your individual tax. A hobbyist investor (in the eyes of the IRS), has NO EARNED INCOME FROM TRADING. Some entity types can pay fully taxable wages which is earned income, (and are an expense to the entity before gain/loss is reported). Earned income as you know is required for (most)retirement plans. And then there are benefits, such as healthcare (and other things), perhaps paid for through an entity, also becoming an entity deduction.
I trade through a TTS qualified S-Corp.
The S-Corp pays employees fully taxable wages, including FICA.
The S-Corp offers employees a set of benefits.
The S-Corp can make quarterly "distributions" to shareholders, if appropriate.
At year end, the S-Corp files tax form 1120S.
As an employee, the entity sends me a W-2.
As a shareholder, the entity sends me a K-1.
At year end, I file tax form 1040 using the various tax reporting documents received.
My S-Corp trades futures only. Annually, the S-Corp purchases Greens Trader Tax Guide, and also consults with Green from time to time. Green did my sole proprietorship taxes years ago.
As a reminder, C-corp, S-corp, partnership, LLC, and sole proprietorship are all valid entities for trading. The exact and most suitable structure for your needs is for discussion with a professional such as Green.
It (trader taxation) doesn't work that way.
Firstly, unless a trader and/or a trading entity qualifies for TTS, the entire issue is moot... you are an hobbyist investor in the eyes of the IRS, period.
Secondly, choice of entity, if any, plays into the issue. For instance, a c-corp forfeits the tax advantages of section 1256 instruments. Also for instance, a c-corp pays a "corporate" tax directly, as well the possibility of paying dividends which may be taxable to a shareholder creating double-taxation. Counter to that, pass-through entities pass-through NET gains, losses, incomes, deductions, and cost basis factors to its members/shareholders/partners, and furthermore, can make "distributions" potentially fully tax-free.
Also keep in mind, traders don't have a lot of expenses. For instance, unless you have clients, a car is likely not deductible, even if titled in a trading entity. However, there may be occasional mileage/travel expense reimbursements or deductions.
Bottomline, TTS gets you to a place where you can begin to "engineer" aspects of your individual tax. A hobbyist investor (in the eyes of the IRS), has NO EARNED INCOME FROM TRADING. Some entity types can pay fully taxable wages which is earned income, (and are an expense to the entity before gain/loss is reported). Earned income as you know is required for (most)retirement plans. And then there are benefits, such as healthcare (and other things), perhaps paid for through an entity, also becoming an entity deduction.
I trade through a TTS qualified S-Corp.
The S-Corp pays employees fully taxable wages, including FICA.
The S-Corp offers employees a set of benefits.
The S-Corp can make quarterly "distributions" to shareholders, if appropriate.
At year end, the S-Corp files tax form 1120S.
As an employee, the entity sends me a W-2.
As a shareholder, the entity sends me a K-1.
At year end, I file tax form 1040 using the various tax reporting documents received.
My S-Corp trades futures only. Annually, the S-Corp purchases Greens Trader Tax Guide, and also consults with Green from time to time. Green did my sole proprietorship taxes years ago.
As a reminder, C-corp, S-corp, partnership, LLC, and sole proprietorship are all valid entities for trading. The exact and most suitable structure for your needs is for discussion with a professional such as Green.
@tiddlywinks
Assuming you are an exchange member and your futures gains are subject to SE tax (earned income) as a sole proprietorship, what are the benefits of an S-Corp vs sole proprietorship?
Thanks!
@tiddlywinks
Assuming you are an exchange member and your futures gains are subject to SE tax (earned income) as a sole proprietorship, what are the benefits of an S-Corp vs sole proprietorship?
Thanks!
For one, sole prop can not "engineer" salary, wages, distributions, or other forms of income from the trading operations. And two, since a sole prop is not an employee, salary/wages and employee benefits of many types can not be deducted from the trading operation income.
I am an expert on the topic for my own situation.
Seek professional advise for YOUR precise situation and needs.
And this type of "advice" is precisely why you pay a professional $300 an hour to do what they're experts at instead of getting advice from the internet.Move to the Bahamas, the Caribbean, as your primary residence and you may possibly escape it.
Do you have to do something to get TTS for the S-Corp?It (trader taxation) doesn't work that way.
Firstly, unless a trader and/or a trading entity qualifies for TTS, the entire issue is moot... you are an hobbyist investor in the eyes of the IRS, period.
Secondly, choice of entity, if any, plays into the issue. For instance, a c-corp forfeits the tax advantages of section 1256 instruments. Also for instance, a c-corp pays a "corporate" tax directly, as well the possibility of paying dividends which may be taxable to a shareholder creating double-taxation. Counter to that, pass-through entities pass-through NET gains, losses, incomes, deductions, and cost basis factors to its members/shareholders/partners, and furthermore, can make "distributions" potentially fully tax-free.
Also keep in mind, traders don't have a lot of expenses. For instance, unless you have clients, a car is likely not deductible, even if titled in a trading entity. However, there may be occasional mileage/travel expense reimbursements or deductions.
Bottomline, TTS gets you to a place where you can begin to "engineer" aspects of your individual tax. A hobbyist investor (in the eyes of the IRS), has NO EARNED INCOME FROM TRADING. Some entity types can pay fully taxable wages which is earned income, (and are an expense to the entity before gain/loss is reported). Earned income as you know is required for (most)retirement plans. And then there are benefits, such as healthcare (and other things), perhaps paid for through an entity, also becoming an entity deduction.
I trade through a TTS qualified S-Corp.
The S-Corp pays employees fully taxable wages, including FICA.
The S-Corp offers employees a set of benefits.
The S-Corp can make quarterly "distributions" to shareholders, if appropriate.
At year end, the S-Corp files tax form 1120S.
As an employee, the entity sends me a W-2.
As a shareholder, the entity sends me a K-1.
At year end, I file tax form 1040 using the various tax reporting documents received.
My S-Corp trades futures only. Annually, the S-Corp purchases Greens Trader Tax Guide, and also consults with Green from time to time. Green did my sole proprietorship taxes years ago.
As a reminder, C-corp, S-corp, partnership, LLC, and sole proprietorship are all valid entities for trading. The exact and most suitable structure for your needs is for discussion with a professional such as Green.