I am up 300k for 2020 but prior years I averaged low 100ks. Not sure if anyone heard of Anderson advisors. Just wondering if they are a good firm. They mentioned writing myself a salary with a llc and I got confused and am wondering whether all these deductions are worthwhile. Can I get the same benefits with trader tax status?
This trader-focused company does webinars with IB and other brokers, and has stuff on their site too: https://www.greentradertax.com/ There are deadlines, etc. No matter who they are, for $7k they'd better be blowing you every week in addition to doing the initial paperwork.
Green trader wants to charge $400 for an initial consultation. I wanted to ask this initial question to decide whether it is beneficial to even working with a firm first if I do not have many trading expenses like seminars and margin fees
I don't know about trading LLCs. However I do know about LLCs in general (I have one). Obligatory talk to a lawyer: Be very careful with muddied accounting. If you're trading personal capital, you can't "use" the LLC to fund yourself. All the money in the LLC needs to be the company's and you pay yourself some wage after. Otherwise you pierce the veil and the protection provided by the LLC is rendered moot. Make sure to set up a very clear and very well written operating agreement as further protection. Most importantly know what LLC laws and regulations apply for your state. Also make sure you guarantee that the LLC will protect you in the event of a wipe out. It's possible just trading is enough to pierce the veil. You'll also need to be aware of export taxes, etc if you trade futures or futures backed ETFs. I doubt you need a consultation to create an LLC. You can use a simple service and just consult a lawyer on your operating agreement and stuff. However, there may be a better corporate structure for a trader - so perhaps advising ($400 seems cheap when it could cost you million to be wrong) is a good idea. You'll also want to look into business insurance. Some places won't insure risky businesses so expect to pay an absurd amount for insurance if you're a leveraged trader. It will be worth it. As for LLCs in general. Yes, the tax savings can be significant. You must be careful though and follow the IRS rules. It's easy to overstep and get a nasty audit.
Ah, fair enough. In that case, I suggest watching this webinar at the very least: https://greentradertax.com/events/how-to-structure-a-trading-business-for-significant-tax-savings/
Thank you for that. I trade regular equities, no futures/forex. Not sure if they are being honest, but they said they can write off expenses against the gains I already made in February and March even though they have passed for 2020
Read this blurb on Greens site... https://greentradertax.com/trader-tax-center/trader-tax-status/how-to-qualify/ *IF* you think you qualify for Trader Tax Status for *2020*, THEN you can put paper to pencil and run the numbers to see if it makes sense. For the previous years with only 100K, unless there is big important information missing in your post, just let em go. Otherwise consult with Green. I trade futures through an entity (S-corp, fwiw) : have for many years. The entity qualifies for TTS. The entity pays me a salary, with payroll tax deductions. My salary is EARNED INCOME. In addition, distributions which may be partial or even fully tax free, occur one or more times per year. The entity also provides certain retirement options, health benefits, and overall a very normal way of life. As an employee, the entity issues me a W2 to prepare my personal taxes. As a shareholder, the entity issues me a K1 so I can prepare my personal taxes. The entity itself files tax form 1120S HTH