yes, you should be qualify, dual jobs for dual income. If govt count ebayers in their employment number then trader should be counted too. It's the new economy but check with your tax advisor or more authority source.
Thanks for the comment. Yes, I will look around and check with accountants. My accountant who prepared my returns last year asked me to find someone else for mark-to-market accounting. I didn't realize this is so specialized !! Off-shore tax heaven, no, I will stay away from that thing. I'm a newbe. : ) Besides, I heard something like 48% of recent hedge funds withdrew their accounts from there. Bankruptcy of hedge funds related to off-share practice is a minor trend, I heard....
If you set up a LLC, you have to pay FICA tax (almost the same as the corporate tax rate). Either way, the net income after tax is the same if you take out all the trading profit. However if you keep the profit in C-Corp, and keep compounding, you get the benefit similar to tax-deferred.
I've never hear of FICA tax. In CA, LLC has to pay a minimum of $800 franchise tax, but I thought you have an option of choosing a corporate entity or a disregarded entity for tax return. If you chose a disregarded entity, then I thought you won't be taxed at the LLC level, but only at personal tax level.....But I don't know for sure. You're right about the c-corporate stuff. Maybe I can set up a C-corp, not taking money at all, until I quite a day-time job, and change the C-corp to LLC, then I will touch the money if I want.... Brainstorming.....
the fifth post down http://www.elitetrader.com/vb/showthread.php?threadid=13508&perpage=6&pagenumber=3
Thanks for guiding me to the page. As I was reading everyone's response and the article, the importance of understanding the IRS's prospectives and views towards trader's status and returns is becoming more clear to me.
Oh, I see. Another expense for entities.... I wish I could just file schedule C, and the IRS thinks that I'm legitimate...
Dude, go to www.GreenTraderTax.com, or greencompany.com. Firm headed by Robert Green. Trader's taxes is about all they do. He will probably tell you if you have an outside job other than trading, regardless of how many trades you do, you are screwed on the trader status as they will see it as a hobby (there are exemptions, but I do not know what they are. I believe its how much you make trading vs the other job). Disclaimer: I didn't read this entire thread, so if you already have this info, sorry.
Man, are you looking to get a double whammy....you gotta run away from all this CPA fee generation stuff. (Ex-public accountant myself, FYI). (All smiles to my friend Bob Green). For example, our traders are taxed on "triple net" - meaning that all expenses relating to trading are submitted to us and we simply reduce their K-1 income by that amount. And, yes, exempt from FICA (Self employment tax of 15% that "entities" pay with their "owners"). Second whammy.....I was born and raised in CA, I love CA, I am in CA a heck of a lot of my time. It's just that, now listen here for a second....Way back, when I started to make some real money, it became simply ridiculous to live there and pay 11% in taxes. Now, simple numbers. Say you make $100K, pay 30% in Federal Income tax, leaving $70K. Now you pay 15% in FICa, down another $15K to $55k, now you pay "Arnold" another 11% or $11K, leaving you with $44K. That 26%, or over $2,000 per month, or $26,000 could surely pay for a few trips from Vegas to LA, right? Find a State with no income taxes, become a professional member of an LLC with the the exemptions I noted above, and you can actually keep some of you hard-earned profits. (This is my personal opinion, not tax nor legal advice, and is in no way related to Bright Trading or any of it's afflitiates). Edit: If, for some reason, you decide to keep the retail trading thing going, regardless.....Yes, my friend Bob Green is one of the leading CPA's in the business. You will see my endorsement on his book cover. Not everyone can or should choose to "go pro" in the trading business, I understand that. Don