The IRS might come after me

[Free Thinker]

Quote from bigmoose:

Read up on wash sale rules... you will likely need 30 days of not trading each equity over the fiscal year change over.

If you traded it on Dec 15th with a net loss, it goes on the shelf until Jan 16th.

Though you are flying close to the deck now, you might as well get tax law down and gain experience in all aspects of this profession. ... especially with your intent on trading OPM.

there are 3 scenarios with wash sales to consider. wash sales only come into effect if you buy the same equity back and hold over to a new year from your last loss sale within 30 days of that sale.
1.trade stock all year and sell at loss dec 29 = no wash sale.
2.trade stock all year and sell at loss dec 1- 29 and buy back before dec 29 = wash sale.
3.trade stock all year and sell at loss dec 29 and buy back next year before jan 29 = possible wash sale for next year.

 

[DHOHHI]

Quote from vhehn:

you are not required to pay estimated taxes. it is only a suggestion. if you dont pay it is true that there is a penalty but the penalty is only the simple interest on the money. if you can make more trading than you would pay in interest in may be better not to pay estimated taxes.

If both conditions cited apply then you MUST pay estimated taxes. Not an option in that scenario. However, if one chooses to not pay them then it's not just the simple interest you mentioned. Rather, it would be penalties plus interest.

 

[GTS]

http://www.irs.gov/businesses/small/article/0,,id=110413,00.html

Estimated Taxes

Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may be charged a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

Who Must Pay Estimated Tax

If you had a tax liability for 2005, you may have to pay estimated tax for 2006.

General Rule
You must pay estimated tax for 2006 if both of the following apply.

You expect to owe at least $1000 in tax for 2006 after subtracting your withholding and credits.
You expect your withholding and credits to be less than the smaller of;
90% of the tax to be shown on your 2006 tax return, or
100% of the tax shown on your 2005 tax return. Your 2005 tax return must cover all 12 months.

Who Does Not Have To Pay Estimated Tax

If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to take more tax out of your earnings. To do this, file a new Form W-4 with your employer.

Estimated tax not required
You do not have to pay estimated tax for 2006 if you meet all three of the following conditions.

You have no tax liability for 2005
You were a US citizen or resident for the whole year
Your 2005 tax year covered a 12 month period
You had no tax liability for 2005 if your total tax was zero or you did not have to file an income tax return. For additional information on how to figure your estimated tax, refer to Publication 505, Tax Withholding and Estimated Tax.

 

[Free Thinker]

Quote from DHOHHI:

If both conditions cited apply then you MUST pay estimated taxes. Not an option in that scenario. However, if one chooses to not pay them then it's not just the simple interest you mentioned. Rather, it would be penalties plus interest.

wrong. you are supposed to pay but if you dont the penalty is only interest.

"Are Estimates Mandatory?

No , it is not mandatory for you to make estimated tax payments. However, if you end up owing money when you file your tax return, then you might be subject to the underpayment of estimated tax penalty. Unless you meet one of the exceptions explained later, this penalty could apply even if all of your income sources are subject to withholding.


What Is the Penalty?

It is a nondeductible interest penalty computed on a quarterly basis. The interest rate varies from year to year based on the prevailing interest rates. Over the past few years, the rates have varied between 5% and 9%."