Two tax questions

[Scataphagos]

1) For an individual trader (trader tax status, but no entity), can health insurance premiums be deducted in any way? Assume filing single, no entity, no income other than trading income reported on Scheds. B and C.

Likely not.

If you want health insurance premiums to be deductible, you'll likely need to establish and work out of a "C" corporation. Health insurance premiums can be deductible for "employees".... even if you're a one-man corp. Also, you might want to have provisions for "reimbursement of medical expenses" from the corporation.

You'll want to check this out and verify. It's been a while since I was in the biz of advising, so my knowledge is not be current.

 

[lindq]

On Green's site, it implies that premiums may only be deducted if you have an entity. I have heard this is not the case from others. Hence, the question.

That goes to the issue of having "earned income." Trading/investing income is not considered to be "earned income" by the IRS. However, if you create a business entity and pay yourself a "salary", it is classified as "earned", and thus is qualified for treatment as regular income.

I am not suggesting that you do so, because that creates a host of other issues.

 

[truetype]

From my experience, the odds of getting a question answered satisfactorily from the IRS is around 25%.

And IRS isn't "held" to what they tell you on the phone. Following their oral advice doesn't immunize you.

 

[Sig]

And IRS isn't "held" to what they tell you on the phone. Following their oral advice doesn't immunize you.

Actually even following a written private letter ruling doesn't immunize you. But you are more likely to get good info with appropriate references from an IRS employee than from a bunch of jackasses on the internet.

 

[dealmaker]

Most CPAs are clueless about trader tax, do a free consultation before giving them your business.

 

[Shadetree42]

From my experience, the odds of getting a question answered satisfactorily from the IRS is around 25%.

I'd gladly take 25%... More like 2.5% in my exp..

 

[Shadetree42]

Most CPAs are clueless about trader tax, do a free consultation before giving them your business.

true. The problem is that there are some "trader tax" specialist CPAs who are equally clueless, yet much more confident -- a dangerous combo. Hence, my posting of questions here.

 

[Steve Alexander]

1) For an individual trader (trader tax status, but no entity), can health insurance premiums be deducted in any way? Assume filing single, no entity, no income other than trading income reported on Scheds. B and C.

2) For the same situation (trader tax status, no entity, income from stock/ETF trading only), does the NYC-residing taxpayer need pay the NYC Unincorporated Business Tax?

Please only answer if you know for certain. Thanks.

Nobody can answer your questions because those questions don't have answers. That's the way the tax code works. It's fuzzy. That way they can accuse you, and you have no recourse.

I have been filing taxes for 55 years. My annual income has varied between $936 and $330,000. The IRS has audited my return and questioned my assertions a few times. They ruled against me only a couple of times. Once, they charged me a little interest, but it was minor. My tactic is to claim everything I can think of. If they let it go, cool; if they question it, I say, "Sorry, I made a mistake."

 

[LukeZen]

Well, its the same from where I am from (Argentina). At first no one knew what or which taxes should I pay, i tried talking to what would be IRS here in Argentina and even they didn't know.

According to two different professional accounting firms (one of them Deloitte) I should be paying 0,25% over my total capital, nothing on profits.