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Tax writing off ?
- Thread starter Sky123987
- Start date
I'm not a tax expert so obviously confirm these statements with your stock trading tax pro...
BUT
It depends on if you're trading as a c corp, an LLC an irs registered trader, or just as yourself. The number of trades you're placing monthly is also important in determining what the irs will accept as far as entity. C Corp is usually the best way to go if you have a significant amount of $ you're trading with because trade volume doesn't matter if it's traded in an account set up in a c corp.
If you're just trading as yourself with no formal business structure defined, you won't be able to write off anything. HOWEVER save your receipts because if you set up an LLC, you can write off your business expenses going as far as 18 months back. Hope this helps -Topher
BUT
It depends on if you're trading as a c corp, an LLC an irs registered trader, or just as yourself. The number of trades you're placing monthly is also important in determining what the irs will accept as far as entity. C Corp is usually the best way to go if you have a significant amount of $ you're trading with because trade volume doesn't matter if it's traded in an account set up in a c corp.
If you're just trading as yourself with no formal business structure defined, you won't be able to write off anything. HOWEVER save your receipts because if you set up an LLC, you can write off your business expenses going as far as 18 months back. Hope this helps -Topher
This is not true.Quote from topherea:
If you're just trading as yourself with no formal business structure defined, you won't be able to write off anything. HOWEVER save your receipts because if you set up an LLC, you can write off your business expenses going as far as 18 months back. Hope this helps -Topher
This site never ends with providing false information.
There is ample information on the web about all this. If you qualify as a Trader in Securities/Commodities as per the IRS then you can write off any of your legitimate trading expenses regardless of whether you set up an entity or not.
As to the original question, it is always preferable to keep all your records and receipts in a professional manner. If you get audited the agent will want to see that you are following the IRS guidelines for properly keeping business records.
http://www.tradersaccounting.com/day-trading-faqs.php
http://www.tradersaccounting.com/index.php
I hope this will qualify as being "truthful" lol I wouldn't want to get anyone's panties in a bunch
And oh yeah, did I mention to check with a professional trader's accountant? Oh that's right... I did. heh
http://www.tradersaccounting.com/index.php
I hope this will qualify as being "truthful" lol I wouldn't want to get anyone's panties in a bunch
And oh yeah, did I mention to check with a professional trader's accountant? Oh that's right... I did. heh
More!
http://www.tradersaccounting.com/product.php?productid=16307&cat=262&page=1
Don't know if this is archived but if it is, it should answer all of your questions...in a professional manner so you don't get audited
http://www.tradersaccounting.com/product.php?productid=16307&cat=262&page=1
Don't know if this is archived but if it is, it should answer all of your questions...in a professional manner so you don't get audited
I really have no idea what this post is supposed to mean, are you trying to back up what you said or admit you were wrong?Quote from topherea:
http://www.tradersaccounting.com/day-trading-faqs.php
http://www.tradersaccounting.com/index.php
I hope this will qualify as being "truthful" lol I wouldn't want to get anyone's panties in a bunch
And oh yeah, did I mention to check with a professional trader's accountant? Oh that's right... I did. heh
You link general web pages without any specifics, but if you actually read those sites you will see that they prove you wrong. They have valid points about forming an entity, as I already have, but there is no requirement to do so. Furthermore these sites are always trying to sell you the most expensive way to do something when there are usually cheaper ways to do it. Like your point about LLCs, I am guessing you have no knowledge that LLCs have to pay an additional franchise tax in a number of states which can make them a bad idea for traders.
Real quick, then I'm outta this thread.
NUMBER ONE TRADER RULE.......
Protect Cashflow.
Most expenses are considered to be hobby expenses unless traded as a business. There are up to 50 expenses that a "business designated" trader can write off... things like data feed to your puter... cable tv.... power supply for puter...
-------------------------------------------------
The more successful an individual is, the higher the tax bracket goes up.
A trader's largest expenses are taxes, whether you LOSE or make money.
A person trading as an individual, (which is classified by the IRS as an INVESTOR) without business designation is subject to the $3000 capital loss rule, meaning, if you lose say, $23,000 you can only write off $3000.
The INVESTOR classification is also subject to wash sales, meaning, if you buy and sell a stock for a loss, you cannot claim that loss if you buy that stock (or derivative) back within 30 days. SO, the wonderful $3000 rule doesn't even kick in until all wash sales are calculated. So you can have $23,000 in wash sale losses and actually end up owing Uncle SCAM.
In addition, as an INVESTOR classification, margin expenses can only be deducted if the trades that require margin make money.
Last writeoffs for INVESTORS are troublesome with the exception of kids, mortgages and charity because the IRS looks at many INVESTOR expenses as hobby expenses. Even with the allowable write offs, the investor is subject to a 2% threshold, meaning, if s/he had say, $100,000 in income, the 1st $2000 cannot be written off... medical expenses have an amazing 7.5% threshold!!
NOW the other plain vanilla designation allowed by Uncle Scam is to be designated as a business entity which includes.......(drum roll please).....
TRADER in SECURITIES election or a formal business structure such as a pass through entity which is an LLC or LP.
Or a C Corp, which in my opinion is the top dog,,,if you have money.
An S Corp shouldn't be considered here because an S corp has to designate 50% income to payroll.
Back in the 19teens the rich learned to use corporations to their advantage to reduce their taxes by increasing financial flexibility.
Trading with a business election allows the trader to write off EVERYTHING from dime one.
C Corp filing allows for extreme flexibility but has some hoops.
Now I'm sure I'll see the double taxation argument and others but the bottom line is that EVERYONE is an individual who has their own 'thing' going on which basically equates to, research, and placing yourself within the structure that best suits you.
Well kids and adults, I'm outta here as I'm sure I'll get some rebuttal but the trade on this thread is pretty much done. Have a good one. -Topher
NUMBER ONE TRADER RULE.......
Protect Cashflow.
Most expenses are considered to be hobby expenses unless traded as a business. There are up to 50 expenses that a "business designated" trader can write off... things like data feed to your puter... cable tv.... power supply for puter...
-------------------------------------------------
The more successful an individual is, the higher the tax bracket goes up.
A trader's largest expenses are taxes, whether you LOSE or make money.
A person trading as an individual, (which is classified by the IRS as an INVESTOR) without business designation is subject to the $3000 capital loss rule, meaning, if you lose say, $23,000 you can only write off $3000.
The INVESTOR classification is also subject to wash sales, meaning, if you buy and sell a stock for a loss, you cannot claim that loss if you buy that stock (or derivative) back within 30 days. SO, the wonderful $3000 rule doesn't even kick in until all wash sales are calculated. So you can have $23,000 in wash sale losses and actually end up owing Uncle SCAM.
In addition, as an INVESTOR classification, margin expenses can only be deducted if the trades that require margin make money.
Last writeoffs for INVESTORS are troublesome with the exception of kids, mortgages and charity because the IRS looks at many INVESTOR expenses as hobby expenses. Even with the allowable write offs, the investor is subject to a 2% threshold, meaning, if s/he had say, $100,000 in income, the 1st $2000 cannot be written off... medical expenses have an amazing 7.5% threshold!!
NOW the other plain vanilla designation allowed by Uncle Scam is to be designated as a business entity which includes.......(drum roll please).....
TRADER in SECURITIES election or a formal business structure such as a pass through entity which is an LLC or LP.
Or a C Corp, which in my opinion is the top dog,,,if you have money.
An S Corp shouldn't be considered here because an S corp has to designate 50% income to payroll.
Back in the 19teens the rich learned to use corporations to their advantage to reduce their taxes by increasing financial flexibility.
Trading with a business election allows the trader to write off EVERYTHING from dime one.
C Corp filing allows for extreme flexibility but has some hoops.
Now I'm sure I'll see the double taxation argument and others but the bottom line is that EVERYONE is an individual who has their own 'thing' going on which basically equates to, research, and placing yourself within the structure that best suits you.
Well kids and adults, I'm outta here as I'm sure I'll get some rebuttal but the trade on this thread is pretty much done. Have a good one. -Topher
Oh yeah, heh... silly me I almost forgot to add that I am not a professional tax guy and anyone seeking tax advice needs to consult with a licensed professional. Anything I (or anyone for that matter) say concerning taxes on this thread or anywhere in Elitetrader.com is as good as hogwash without the license. God bless