What matters is the HOW, WHAT, and WHEN, not the WHY of your trading business. Time spent (full-time basis as you say) is only ONE factor. Being the only source of income is irrelevant to the taxation, deductions and credits applicable to a particular type of income.
some of the info you are receiving is incorrect. i've been filing mtm 15 straight yrs. first the money from google can be put on form 1040 under "other income" which will require you pay se taxes and the computer will figure out.the person who said you transfer income to your sch c is correct to zero out your expenses and not show a loss on sch c. all this is put on foot notes that is sent in with your tax return and you can get these footnotes from greens sample returns. but theres another problem the last 2 yrs with the new reporting. with mtm in the old days all you ahd to do is take your total sales minus your total buys and thats your profit assuming at the beginning and end of the yr you're flat and add back in all withdrawals.but now unless you elect mtm with your clearning firm you get a 1099 that shows all wash sales and its really impossible to figure out your true profit without some type of trading t,ax software like trade log. trade log is easy to use
It depends on what box the income shows up in...kinda agree with hafiz that it may be ok to put it on line 21 of the 1040 ....since it isn't necessarily income from a job. Get the instructions for the box it's in on how to report it.
If the income is reported in box 7 you need a separate sc c and need to do an se.....however if its reported in box 3 ...then take it to line 21 of 10 http://md27.quartz.synacor.com/service/home/~/?id=36226&part=2&auth=co&disp=a
Thank you for the detailed response. I looked into putting it on line 21 of the 1040, but my research showed that was for unusual and non-recurring items. Unfortunately Google deposits the checks on a monthly basis in my account, so I didn't think it would belong there. And the SE instructions don't mention anything about that line item for self employment tax. I have finished my Federal taxes (now working on state), and I included it as a schedule C with a footnote both on the Schedule C and the SE. We'll see how it goes. I've been using TradeLog for 4 years and discovered it when I was using Tradestation and found their end of year statements didn't conform to the tax requirements. I also had an account with Interactive Brokers and theirs did conform. That's when I discovered TradeLog. Of course, Interactive Brokers changed their end of year reporting one or two years ago when the whole wash sale thing changed everything. Now theirs doesn't conform either. But TradeLog's Broker Connect always did the job right...except for this year. About a week or two ago, I received an e-mail from TradeLog that Interactive Brokers has just changed their format and Broker Connect will not work! Friggin great....how can IB change their format on something so important just before the tax extension deadline! Someone at IB really goofed on this one. TradeLog recommended the web import method for IB since Direct Connect didn't work. Fortunately, the web import method worked, but there were many trades that were incorrect. I spent about a day tying up loose ends and adjusting the trades manually. The big problem was if I had reversed a position in one shot, TradeLog wouldn't catch it (e.g. I was long 100 shares, then sold 200 so I would go short 100). All of these types of shares were erroneous on TradeLog. Hopefully I won't wait till last minute next year
Your link says "must authenticate", so I can't read it. The income is reported in box 7. I did do a separate Schedule C and combined it with my trading expense Schedule C and brought the total forward to Line 12 of 1040. This in effect lowers my expenses and shows higher income, so I pay the income tax on it. I also included an SE with a footnote and paid the self employment tax as well at roughly about 10% (a bit more).
Ok didnt know that your google income was monthly. I've always used line 21 when I get a one time payment. As I said some brokers such as apex allow a trader who is a mtm trader to elect mtm for your 1099 so you don't get that wash rule bs as your not subject to it. As you should know just make sure your total sales are the same or more than what ib has as your total and sends to the irs
sorry...got it off the irs.gov website and its just a pic of the 1099misc. it does seem a bit strange that they report it in box 7 because usually its only for independent contractors...so not sure how google is characterizing the income. I do understand your confusion and would normally recommend you call the irs......BUT....no one's home
"IF" it were me I would NOT combine the SC C's and net the result on the SC SE simply because the only reason for the trader sc C is to report your expenses as a trader and NOT as a business which requires you to pay SE taxes. If the other income IS a business that requires you to pay SE taxes then you need to pay SE taxes on the FULL amt. As it is your underpaying. Having said all that...probably won't make any difference what you do since the IRS has no one home and the odds of full scrutiny resulting in a nasty IRS letter is pretty slim.....better yet don't file electronically...do it all by hand (paper file)
that's true what Richard says. that's why as a trader you just transfer from sch d or form 4797 the exact amount of your expenses you have on sch c. that's why the many foot notes are used to explain things like the moving of income to offset the sch c exps and that you as a trader don't owe social security and to say you've been a mtm trader since whenever. even though as Richard says i'm positive the irs never reads in all my yrs I've never had one question from irs