Is it true that if I do S corp or LLC it can only count on income I make starting from today moving forward? I cannot retroactively deduct against my own personal short term capital gains of $300k that I already locked in?
The main benefits for a trading entity are getting health care, retirement plan, and similar tax benefits. Trader status is separate and is more for people who lose money and might want to get ordinary losses instead of capital ones in a bad year.
Another thing to consider is if you become a LLC you will most likely have to pay professional data fees which could be substantially more then you are paying now.
Advantage: you can pay into social security, and not forfeit all your past contributions to SS bc you have not payed in for >= 5 of the last 10 years. Disadvantage: you have to pay professional data fees. Pretty sure most states do not allow you to get group health insurance with a single-person LLC, so unless you can hire someone, seems like no benefit there.
Well you can get into a group plan but that’s usually thought an employee aggregator like Trinet or similar. But the point I was making was about deducting the health insurance cost, not the plan in particular (although getting a good group plan instead of a crappy Obamacare one is another good choice if you need regular care). You can’t deduct your personal health insurance costs, but your business can provide very comprehensive health coverage and deduct that insurance cost.
I'm trying to find a way to deduct and write off the profit I already made from Jan- March 26th mainly. And I did not know I would lose all my SSI contributed if I don't contribute greater than 5 of 10 years
Best to look it up for yourself, but AFAIK you need to have worked (contributed) 20 out of last 40 quarters to collect SSI. E.g., if you solely trade without an entity for 10 years, you need to become an employee for at least 5 years to collect any of your lifetime contributions. Would be happy to be wrong here, but I'm pretty sure that is accurate.
I am not a credentialed tax adviser... 1) An entity is a separate taxpayer. 2) There is a 75-day window from entity inception for the entity to make tax related elections. Retirement and health are big benefits. Also as you mention, for some, ordinary loss which has virtually no limit (there is, but it's large, and I don't know what it is) is a big deal compared to the alternative loss limit of $3000 per year, with carryover of larger amounts also subject to the $3000 loss limit. They really should bump that 3000!!! BUT... TTS (Trade Tax Status) is a requirement before those benefits and others can be realized! Correct. I don't know about group health insurance options for a SMLLC but... SMLLC is no different than a sole-proprietor. A sole-proprietor can deduct health insurance premiums up to a limit, and some other qualification rules. As for SSI... what is important for me is the taxable earnings. In 2020 it's $137,700... after that there are other gotchas, but they are less than 15.3%!
2) There is a 75-day window from entity inception for the entity to make tax related elections. So it would be possible for me to retroactively deduct against my realized capital gains? I just have to move fast before the 75 day window right??