don have you not said you were a cpa before? how can you be spreading misinformation about trader taxes are maybe you don't know the laws? no trader wether 1099 are k-1 are retail full time trader is subject to fica taxes period. as far as listing expenses on a schc and being messed with by the irs thats bs. i've been filing sch c trader taxes as a 1099 for 8 years with billions of sales a year and writeoffs and never ever 1 word. also any trader writing off more than 20-25k of trader exp's is bold faced lieing about his expenses. go talk to robert green he'll set you straight
The traders I speak with are generally talked into forming some sort of entity, thus paying themselves a salary of some sort, and paying FICA. No big deal. I don't want to get into a legal/tax debate on a public board. I generally just say how our traders are treated without any "Trader Tax Status" requirement. I happen to be very conservative in the legal/regulatory arena. Everyone should consult their own tax professional. I pasted some stuff from my friend, Bob Green's, website about Trader Tax status. Self employed individuals pay Self Employment taxes. Who Must Pay Self-Employment Tax? You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. Your net earnings from self-employment (excluding church employee income ) were $400 or more. You had church employee income of $108.28 or more. Your net earnings from self-employment are based on your earnings subject to SE tax. Most earnings from self-employment are subject to SE tax. Some earnings from employment (certain earnings that are not subject to social security and Medicare taxes) are subject to SE tax. If you have earnings subject to SE tax, use Schedule SE to figure your net earnings form self-employment . Before you figure your net earnings, you generally need to figure your total earnings subject to SE tax. Note: The SE tax rules apply no matter how old you are and even if you are already receiving social Security or Medicare. ------------ Are You Self-Employed? You are self-employed if any of the following apply to you. You carry on a trade or business as a sole proprietor or an independent contractor. You are a member of a partnership that carries on a trade or business. You are otherwise in business for yourself. Trade or business. A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. The facts and circumstances of each case determine whether or not an activity is a trade or business. The regularity of activities and transactions and the production of income are important elements. You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. You do need, however, to make ongoing efforts to further the interests of your business. --------------------------- Trader Tax Status: Part-time traders may qualify for trader tax status. However, if you donât trade all day, every day, be ready for a fight from the IRS. If you have another job or business activity besides your trading business, you should be aware that the IRS might challenge your trader tax status in a future tax audit. Recently, the IRS has started to examine more traders (it has increased the number of audits across the board). The IRS has a new blessing from Congress to get tough on tax cheats, and Congress needs new revenue to balance budget deficits. Based on our experience with the IRS examining tax exams, we have noticed a new, disturbing trend from the IRS: It is challenging "part-time traders" and "money-losing traders." Click here to read about "money-losing traders." Have a good long weekend.. All the best, Don