posted
As I am sitting here struggling with a schedule D the size of a phone book, I am seriously contemplating changing my tax status officially to Day trader. I would love some insight from others who have done it. I understand the wash sale rule doesn't apply, What about deductions for various programs and stock picking services? Also once you make that change is it possible in the future to change back? I know the IRS has subjective rules I don't have an accurate count of my trades but they are in the thousands-anyone encounter any problems with submitting their tax forms as a daytrader? I have a call into the IRS and am waiting for a return call. Thanks -Debi
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posted
Debi I just give mine to my accountant and say here, but SFO magazine has a great article on the pros and cons of filing as an investor or a sole proprietor. I can't seem to get to their site at the moment http://www.sfomag.com The February 2004 issue The article is called Make Your Trading A Business: And Cut Your Taxes. I havn't read the article yet, just skimmed it. If I get to their site I'll get the link you would need.
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posted
somebody correct me if I am wrong. I think I saw it on turbo tax and it said if you have a bunch of trades to just put multiple trades as your trade description. You do need to seperate short and long term gains though. I have done it this way for the past two years.
posted
Greg, I think Deb actually wants to file as a sole Propietor where her trading would be considered a business which makes all ordinary and necessary expenses incurred in trading deductible. Plus Margin interest would be 100 per cent deductible. Plus would not be limited to to the $3000 capital loss limitation which investors are saddled to.
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posted
Debi: Sorry I can't get to their site and I have to go to bed. I'm still one of these POOR SOULS who is still a SLAVE and have to work for some one else. If you don't get any one that is all ready doing this to answer you. It would be a little late by the time you got it, but if you emailed your mailing address to SmokingUSA@hotmail.com I'd send you the magazine if it would help you. Have a GREAT EASTER!!
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posted
Thank you Smoking USA and Webman for your answers and Smoking you are correct I am thinking of filing as a sole proprietor/day trading business. I especially want to get rid of the wash sale losses and especially when you know a stock is tanking but you want the stock, to sell to minimize your loss and be able to rebuy in case it does well-yet not lose the ability to take the loss should it be a total dog. Not to mention all the fraud stocks I nibbled at over the years-Would they be deductible as theft? (half-kidding). The programs I use are the ever popoular $1200 year one, Level 2 with Freetrade for $180, Cabot $150, Roller Coaster $250 (2 years)-I don't even look at it anymore. Hidden Gems not sure price, Gainskeeper about $700 so far (and I am still wrestling with getting all my QIF files in). So that is $2300 in expenses without even trading yet. Would those be deductible any other way? Thanks for the article address. I will try to find it later. Happy Easter/Passover Jesus celebrated both in a very original way. -Debi
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posted
Programs and stock picking services would definitly be deductable as sole proprietor. Stock picking services would go under subscriptions. Programs and I'm assuming your talking about software would be expenced under section 179 unless you would rather depriciate it. Rarely any more though would I do that because software seldom lasts more than a year without a new version put on the market. The IRS web site a www.irs.gov has a lot of good reading on alot of these things. I use Turbotax Home and Business and it takes care of alot of these things but you still need to know a little about tax law to get a better tax return (for you that is). Hope this helps in some way because taxes are vary frustrating and burdensome. Wish you well. timberman
[This message has been edited by timberman (edited April 09, 2004).]
posted
how can you turn your trading in to a business?
did this years tax return so glad it's over what a pain...
but next year i'm toast at $62,000 in gains so far and growing this year... taxes are going to be a big problem!!!!! how can i keep more of my money...
i need some help to get out of paying the old bush and his money spending machine......
i have a 1 year old son and a wife that doesn't make much cash that helped allot this year.. but if i can save more..willing to learn
thanks for the link posted above now i can get started saving more money.
posted
Thanks Timberman, The expensive program is OTC charts which runs $100 month. It has helped me make a lot more money than when I didn't use it. I did have to get a second computer to use it, it takes a lot of juice. Whichever way I file will have its own benefits and problems. Scedule D is a pain in the Butt, I actually don't mind paying taxes, just wish there were a graduated sales tax on everything but basic food and the first 1000 month housing. Everything else would have a sales tax that would escalate up as the buying/consumption becomes more luxurious. Like a $20,000 or less car- minimum ales taxes, $100,000 or better car significantly higher. I think it would be great-tap all the underground money, eliminate the hassle of filing and would help the economy if employers didn't have to pay taxes for their employees. Probably too simple, nothing is ever that easy but I wish it were. Have a good night. -Debi
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posted
Doji-I don't have an answer for you (or me) yet. I am planning on knowing how to before I file my 2003 return. If you are making big returns like that you must in essence be a day trader. I am still small potatoes but definitely working as a trader. I spend a good 50 hours a week on trading and related work and am somewhat mystified by the ridiculous tax code we have. I am self employed as a singer/songwriter for the last 10 years and already fill out a schedule C. I think it makes sense to be self employed as a trader too. I have been reading your posts and thought it sounded like you knew what you were doing. I will be paying a lot more attention now. Have a Happy Easter-Debi
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posted
Doji, I have good news for you. I just got off the phone with a great IRS agent and he walked me through the process. Basically if you do mostly trades versus investments, looking to produce an income from trading, keep mostly very short term, spend the bulk of your time doing so you can probably file as a 'Trader in Securities' as your job (Sole Proprietor Business). It helps if you have a separate account for your investments versus your trades. I have 5 accounts and had kind of unofficially thought of one as a long term account with stocks like HNZ, BSX, XMSR, HD, VAR, etc. -I will file a schedule D for that account. For my trading accounts I am a 'Trader in Securites' and will fill out a Schedule C (self employed). I(you?) need form #4797 -then you need the value of each security as of close of 2002 that you brought over to the new year-called 'mark to market' then value of trading account(s) as of close of 2003. This is your income before deductions for allowable business expenses-OTC charts, Alphatrade, stock picking services, accountants. The best news is no Wash sales to contend with and no self employment tax on the income derived from the sale of stock according to the IRS man I spoke with (sounds almost too good to be true). If you filed a return last year and and need to file an extension you can log onto IRS.gov and ask for form 4868 and ask for th eextension by phone. How easy is that? Also I am not sure how to handle this part but you will probably need to file quarterly tax estimates with some money to avoid a penalty next year. You will have to figure that one out. My husbabnd files quarterly as he is self employed and I will guesstimate along with him and his payments. Good luck-this should be awesome for you? Do you have another job besides trading? -Debi
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posted
WWJD-thru-me great dd thank you very much....
i was a waiter at a five star restaurant in central florida been a waiter for way to long.... great money in season 2bills a nite but the crap from these rich old people was a nightmare.. glad i'm out of that...
i do photographic work for some local magazines for extra cash...
it's all good.....
my wife thought the markets were like vegas (IT'S GAMBELING) till i took out 3g's and said go buy something!
LEAVING FOR EL SALVADOR IN TOW WEEKS.. FOR SOME MUCH NEEDED R&R...
posted
Hi guys, I know that this will not help now but if everybody in USA start asking for the FAIR TAX law to finally be approved we'll be in a very good shape especially us traders.- This change had been presented to the congress but they allways push it to the back burner, but I belive the power of many , many ,many voices and it is possible that some day soon we can get it, so I hope for. FOR THOSE OF YOU THAT DON'T KNOW WHAT I'M TALKING ABOUT PLEASE GO TO WWW.FAIRTAX.ORG and read it how it work. I want to clarified that I am not advertised this, simply I am very tired of our long , stupid and complicated tax law and I thought that you guys will be interested on this subject. ED SOONER OR LATER I WILL LEARN
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posted
Hey SmokingUSA... the link you posted isn't going through.
Here's an interesting questions... if you are to file your trading as a home business... how many exactly home business' asre we alowed to have? For example... I have been have tremendous success with a network marketing company which of course is considered my home business. THEN I'm an actor on top of that... so there are a ton of write off's there. THEN I'm looking into this whole trading as a business thing... am I making things more complecated for myself? Or is this the way to go? Right now I'm trading in an ROTH IRA (so I don't ever have to think twice about the taxes and what not), but I'm thinking of opening a regular account just so that I can start reaping the imediate benifits of my trades. I've been putting some of the profits from my network marketing straight into my IRA... but since I've been doing so well with the IRA why not just start a regular account too?
posted
e2Brutay-I also have a home based business as a singer/songwriter. I do that a good 25 hours most weeks-sometimes more-on road trips, workshop weeks and Trade in securities usually every day the market is open plus research, etc. so maybe 42-60 hours a week but therre is some overlap. i book myself from my desk making calls after 11 and in the afternoon when I have made my buys and can monitor level 2 and news. If you are trading all day while you do your other business it is worth looking into. It is somewhat subjective so be sure you can back up your plan if you are audited. DD on this one for sure-IMO-Break a leg-Debi
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posted
e2brutay75 I'm sure you can have more than one business. I'm not sure if you would have to keep it seperate or not. I always just hand mine into my accountant, but I use to do the cigarette marketing and my wife did her program, I did keep the paper work seperate, but I just gave the accountant the paper work and he took care of it for me. What program are you in? My wifes friends just started a new program that she is just getting into with them. Check it out if you get a few moments. With my Luck I'll get accussed of advertising here. So if the Link isn't there email SmokingUsa@hotmail.comm and I'll forward the link to you. http://www.vitagenesis.com/
I.D# VG120
About the link for SFO magazine, I have a feeling there server is down and being a holiday they don't know it yet. So, to make a long story short I know you can have more than one business, but not sure how to do on the tax forms, I would keep them seperate though. Take care! Bill
YOU FILE FOR C-CORP STATUS WITH THE IRS FOR THE CORPORATION.
$0.00
YOU SET UP A FOUNDATION.
$500-$2,500 DEPENDING ON DO IT YOURSELF OR ADVANCED FINANCIAL PLANNER (DO NOT USE YOUR ACCOUNTANT YOU NEED A SPECIFIC FINANCIAL PLANNER WHO DOES ASSET PROTECTIOON IF YOU CAN'T DO THIS YOURSELF)
YOU EITHER TRADE THRU YOUR FOUNDATION OR YOU DONATE TO IT.
TAXES 0%.
AND YOU THOUGHT ALL THOSE "HIGH-PROFILE" PEOPLE HAD FOUNDATIONS TO HELP THE "CAUSE".
OPTION NO. 2:
GET A PASSPORT FROM ANOTHER COUNTRY (YOU THOUGHT THIS WAS ILLEGAL).
OPEN YOUR ACCOUNT UNDER YOUR NEW PASSPORT AS A FOREIGN CITIZEN. FOREIGN CITIZENS ARE TAX-EXEMPT IN THE USA. NOW YOUR TAX FREE NO STRINGS ATTACHED. DO A NAME CHANGE IN THE COUNTRY YOU GOT THE PASSPORT FOR FURTHER ASSET PROTECTION.
THIS ISN'T A VERY GOOD OPTION FOR MOST OF YOU SINCE FOR IT TO WORK, YOU CAN'T TELL ANYONE ABOUT IT, YOU HAVE TO KEEP IT 100% TO YOURSELF. AS IF THAT WASN'T ENOUGH, YOU CAN'T MIX YOUR NEW LIFE WITH YOUR CURRENT LIFE AND THAT WILL REALLY COMPLICATE MOST OF YOU.
FOR THOSE OF YOU WISHING TO JUST SIMPLFY THINGS, THEN ONCE A WEEK/MONTH OR EVERYTIME YOU MAKE A SALE, YOU WIRE TRANSFER FROM YOUR STOCK ACCOUNT TO THE IRS 40% OF THE PROFIT FROM THE TRADE. GOES RIGHT INTO THE IRS PIGGYBANK AND THERE'S NO QUESTIONS WHAT-SO-EVER. KEEP TRACK OF THE LOSSES FOR DEDUCTIONS. 40% IS THE GOOD ROUND FIGURE TO USE BECUASE YOUR OVER-PAYING WHICH CAN NEVER GET YOU IN TROUBLE LIKE UNDERPAYING AND YOU ALWAYS GET THE MONEY BACK WHICH IS FAR EASIER THAN TRYING TO COME UP WITH THE EXTRA MONEY APRIL 15.
GOOD LUCK...
[This message has been edited by U4TSAF2 (edited April 10, 2004).]
posted
e2brutay75: SFO Magazines phone is 319-268-0441 email is editorial@sfomag.com I know they let you buy an individual articles also. Hope this helps. I know not as good as the web site. They probably give you three months sample of the magazine also. Have a Happy Easter!!! Bill
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quote:Originally posted by WWJD-thru-me: Doji, I have good news for you. I just got off the phone with a great IRS agent and he walked me through the process.
[This message has been edited by U4TSAF2 (edited April 10, 2004).]
posted
Doji say what!!: Quick add. ALL ORDINARY EXPENSES INCURED WITH TRADING ACTIVITIES ARE DEDUCTIBLE. (I can see a new computer here) Related Travel expenses No two-percent AGI which plaques investors.
Deduct expenses on Schedule C and report your income on Schedule D or Form 4797 (if you elected mark to market accounting. Not limited to the $3000 capital loss limitations. Education, seminars and traing expenses deductible.
If I keep reading this I'm going to want to do this even if I'mm not traders like your selves. Bill
[This message has been edited by SmokingUSA (edited April 10, 2004).]
take that $1300 and find a 100% popper now you have $2600 put it all back down! now your 2600 = 5200 ah the math is getting better AND EASIER... but don't seperate your money just yet put it all back down in one stock now your 5200 is $10400 and on
when it get's to 60grand+ where i am at now LIFE IS GOOD and you can seperate your money now .... just to much risk holding 60grand in anything
i found ctkh at .0003 put all of my 1300 in and it went to .0050... SOLD IT
got in qbid at .0003 again larger share count than i had in ctkh... sold that
posted
Smoking, Lol... your wife just got into one huh?
Well I'll tell you what! If she want's to hear about my opportunity... I'll be happy to hear about hers! You never know... feel free to email me your phone or I'll email you! One or the other if your interested. (like you said don't want to get into advertising here)The website looks interesting too.
Anyhow thanks for all the people that helped answer some of my questions. We'll see what happens... I'm cool with this year. But I'm definately looking to take a different stance next year. Gotta do my DD!
Happy holidays all!
e2
_______
quote:Originally posted by SmokingUSA: e2brutay75 I'm sure you can have more than one business. I'm not sure if you would have to keep it seperate or not. I always just hand mine into my accountant, but I use to do the cigarette marketing and my wife did her program, I did keep the paper work seperate, but I just gave the accountant the paper work and he took care of it for me. What program are you in? My wifes friends just started a new program that she is just getting into with them. Check it out if you get a few moments. With my Luck I'll get accussed of advertising here. So if the Link isn't there email SmokingUsa@hotmail.comm and I'll forward the link to you. http://www.vitagenesis.com/
I.D# VG120
About the link for SFO magazine, I have a feeling there server is down and being a holiday they don't know it yet. So, to make a long story short I know you can have more than one business, but not sure how to do on the tax forms, I would keep them seperate though. Take care! Bill
posted
Thank You EDDREAMS. Lets explain to people why we would like this Fairtax law to go into effect. ~ No Capital Gains Tax ~ No Property Tax ~ No Sales Tax ~ Keep your whole gross income check ~ Flat rate of 21% for retail. ~ Rebate for necessities (toothbrush,toilet paper,ect.)
I am so for this idea because our government takes our hard earned money away. If you think about it, they take almost half your pay check and you still pay them when you buy something.
quote:Originally posted by EDDREAMS: Hi guys, I know that this will not help now but if everybody in USA start asking for the FAIR TAX law to finally be approved we'll be in a very good shape especially us traders.- This change had been presented to the congress but they allways push it to the back burner, but I belive the power of many , many ,many voices and it is possible that some day soon we can get it, so I hope for. FOR THOSE OF YOU THAT DON'T KNOW WHAT I'M TALKING ABOUT PLEASE GO TO WWW.FAIRTAX.ORG and read it how it work. I want to clarified that I am not advertised this, simply I am very tired of our long , stupid and complicated tax law and I thought that you guys will be interested on this subject. ED SOONER OR LATER I WILL LEARN
take that $1300 and find a 100% popper now you have $2600 put it all back down! now your 2600 = 5200 ah the math is getting better AND EASIER... but don't seperate your money just yet put it all back down in one stock now your 5200 is $10400 and on
DOJI
I'm fairly new here and I was wondering if you'd mind sharing your strategy for finding your picks and then what you use to evaluate those you end up buying. I've followed some of your post I would appreciate any advice you would give.
I've only been doing this about 6 weeks or so and doing okay so far. Studying the charts and TA stuff and getting a handle on it pretty good. I'm up about 30% overall but I got stuck in a couple that traded sideways for weeks with my initial investment of about 1,000. I'm trying to put together a strategy and it seems your doing pretty well. I also have a little boy (2)and my wife stays home so I know how the extra cash can help.
Here's one thing I learned about taking deducitons on a home business. If you deduct square footage of an office area and decide to sell your home don't take the deduction the year you sell your house. If you do then the next year the IRS will look at it as the sale of a business and you'll end up with another set of tax woes. Check this out but this is what I was told for this year as I sold my home in Jan.
Anyway, any help is greatly appreciated. Best of luck to you.
posted
Doji-I used to work as a waitress 30 years ago for quite a few years. Worked in about 10 different states as a young hippie. Good money and always able to find another job if I wanted to go somewhere else. It was fun while it lasted but it is difficult to keep up the energy and good attitude required for the long haul. I like shuffling to the computer with my coffee in my PJ's and earning a living. Hard to beat. Have a great trip to El Salvador. Are you from there? Que la vaya bien! -Senora Debi
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quote:Originally posted by WWJD-thru-me: Doji, I have good news for you. I just got off the phone with a great IRS agent and he walked me through the process. Basically if you do mostly trades versus investments, looking to produce an income from trading, keep mostly very short term, spend the bulk of your time doing so you can probably file as a 'Trader in Securities' as your job (Sole Proprietor Business). It helps if you have a separate account for your investments versus your trades. I have 5 accounts and had kind of unofficially thought of one as a long term account with stocks like HNZ, BSX, XMSR, HD, VAR, etc. -I will file a schedule D for that account. For my trading accounts I am a 'Trader in Securites' and will fill out a Schedule C (self employed). I(you?) need form #4797 -then you need the value of each security as of close of 2002 that you brought over to the new year-called 'mark to market' then value of trading account(s) as of close of 2003.... -Debi
Debi - did the IRS agent tell you that you needed to elect the Mark to Market method on 2002's tax return if you want to file that way for 2003? I read that on another site last night and was wondering if he told you the same thing. Thanks!
posted
No-He didn't but the Gainskeeper people read it that way. I am going to go for it anyway since I have been trading like a maniac all year. It seems a little strange that you would have to designate this a year ahead of time. What if you decide to start trading in June? I am going to muddle through this and from reading the IRS.gov site if one of their agents gives you the wrong info-you may have to pay the tax you would otherwise but not a penalty. Also since you can ammend a previous return can't I just ammend it to add this? I am filing for an extension either way. Seems reasonable to me. -Debi
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quote:Originally posted by U4TSAF2: YOU FILE A CORPORATION.
$150-$300.00 AVERAGE
YOU FILE FOR C-CORP STATUS WITH THE IRS FOR THE CORPORATION.
$0.00
YOU SET UP A FOUNDATION.
$500-$2,500 DEPENDING ON DO IT YOURSELF OR ADVANCED FINANCIAL PLANNER (DO NOT USE YOUR ACCOUNTANT YOU NEED A SPECIFIC FINANCIAL PLANNER WHO DOES ASSET PROTECTIOON IF YOU CAN'T DO THIS YOURSELF)
YOU EITHER TRADE THRU YOUR FOUNDATION OR YOU DONATE TO IT.
TAXES 0%.
AND YOU THOUGHT ALL THOSE "HIGH-PROFILE" PEOPLE HAD FOUNDATIONS TO HELP THE "CAUSE".
OPTION NO. 2:
GET A PASSPORT FROM ANOTHER COUNTRY (YOU THOUGHT THIS WAS ILLEGAL).
OPEN YOUR ACCOUNT UNDER YOUR NEW PASSPORT AS A FOREIGN CITIZEN. FOREIGN CITIZENS ARE TAX-EXEMPT IN THE USA. NOW YOUR TAX FREE NO STRINGS ATTACHED. DO A NAME CHANGE IN THE COUNTRY YOU GOT THE PASSPORT FOR FURTHER ASSET PROTECTION.
THIS ISN'T A VERY GOOD OPTION FOR MOST OF YOU SINCE FOR IT TO WORK, YOU CAN'T TELL ANYONE ABOUT IT, YOU HAVE TO KEEP IT 100% TO YOURSELF. AS IF THAT WASN'T ENOUGH, YOU CAN'T MIX YOUR NEW LIFE WITH YOUR CURRENT LIFE AND THAT WILL REALLY COMPLICATE MOST OF YOU.
FOR THOSE OF YOU WISHING TO JUST SIMPLFY THINGS, THEN ONCE A WEEK/MONTH OR EVERYTIME YOU MAKE A SALE, YOU WIRE TRANSFER FROM YOUR STOCK ACCOUNT TO THE IRS 40% OF THE PROFIT FROM THE TRADE. GOES RIGHT INTO THE IRS PIGGYBANK AND THERE'S NO QUESTIONS WHAT-SO-EVER. KEEP TRACK OF THE LOSSES FOR DEDUCTIONS. 40% IS THE GOOD ROUND FIGURE TO USE BECUASE YOUR OVER-PAYING WHICH CAN NEVER GET YOU IN TROUBLE LIKE UNDERPAYING AND YOU ALWAYS GET THE MONEY BACK WHICH IS FAR EASIER THAN TRYING TO COME UP WITH THE EXTRA MONEY APRIL 15.
GOOD LUCK...
[This message has been edited by U4TSAF2 (edited April 10, 2004).]
How realistic are these ideas?? I love em! Could someone plz post a link or help explain loss claims? Im 21 and so confused about taxes I feel like a blonde girl with big boobs. However, I do realize the ever valuable ideas and info in this thread so Im printing the whole dam* thing. Thank you guys/gals for soo much useful info I can use to hopefully not repeat some mistakes already made by others. About the loss thing, I started with 4000$ and now have 2... I gain 650 playin WNMI then get stopped out 10 times in a row, each time a loss of 100$. Just horrible luck I guess or maybe its the fact I think Im big-time and try to play 3 stocks at once. Im closing positions and focusing on 1 stock till i get the hang of it. Pray for me... [This message has been edited by BroBro (edited April 12, 2004).]
[This message has been edited by BroBro (edited April 13, 2004).]
posted
FORBES WHEN HE RAN FOR PRESIDENT TRIED TO PUSH HIS FAIR TAX AND HIS WAS 15% INSTEAD OF THE 21% WE SEE HERE.
quote:Originally posted by 1BigTip: Thank You EDDREAMS. Lets explain to people why we would like this Fairtax law to go into effect. ~ No Capital Gains Tax ~ No Property Tax ~ No Sales Tax ~ Keep your whole gross income check ~ Flat rate of 21% for retail. ~ Rebate for necessities (toothbrush,toilet paper,ect.)
I am so for this idea because our government takes our hard earned money away. If you think about it, they take almost half your pay check and you still pay them when you buy something.
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