Hello, I'm new here, happened to stumble upon this forum while searching for some tax info and was pleasantly surprised with the information and people on here. So this will be my first year filing under TTS election with MTM accounting. I had originally planned on hiring one of the leaders in this field, but am really struggling with justifying their fees for first year clients, so have began to explore filing on behalf of myself. I haven't entirely ruled out hiring outside help yet, but first intend to finish my research beforehand. I've made the timely section 475 elections last year prior to deadline, and have completed the Form 3115 which is due with this years return. I understand I'll be filing Form 4797 in addition to Form 3115. I will be filing as an individual/sole proprietor this year. No formal entity has been created yet, but it is my understanding that although they offer additional deductions in so far as health care and retirement contributions, not having one does not disqualify me from the 20% QBI. My main question right now to those who have/do file under TTS is regarding deductions. During my consultation with aforementioned accounting firm, they reaffirmed my belief that the TTS qualifies me for the 20% QBI qualified business income deduction. Yet I see several discussions about folks talking about itemizing their expenses...ie; internet, subscriptions, computers, etc.... Which raises the question, why? Rarely, are a profitable trader's itemized expenses going to exceed the 20% standard deduction. So, looking to hear some experiences some of you may had.
If you are not willing/able to pay for top accounting advice, at least read the best guide out there for traders: Green's 2023 Trader Tax Guide Paperback. Best $60 you ever spent. Available on Amazon
most people are idiots. therefore most things you read are written by idiots, even other traders, therefore they waste time itemizing things when they dont have to because indeed its not worth it the majority of the time, QED
Both these do taxes. Let them do it for you the first few years to get squared away. tradersaccounting.com info@tradelogsoftware.com
One reason is that QBI thresholds and limits are INSANELY complicated. If you earn beyond 175K or so, which is no great feat, you're in the heart of the insanity. Not to mention ensuring you don't stray into an UN-qualified-for-QBI trading vehicle. Myself, I trade TTS/475 through an S-Corp, and have for many years. I earn W2 wages, have payroll taxes, and S-corp benefits. I made the decision when QBI was enacted not to claim QBI at all... My 'fix' was to earn beyond the limits and thresholds! Being able to engineer wages, benefits, deductions, reimbursements, etc is very powerful!! Also, for the record, QBI and itemized expenses is not an either/or thing... you are expected to, and I'm pretty sure the word 'required' can be used here, to claim legitimate expenses of your 'for profit' business. If legitimate deductions alter a potential QBI deduction, well, that's probably what the IRS intended. Anyway, in my situation, QBI has no value. YMMV, but be careful... Your TTS is what you risk. Good luck
You are looking at it backwards... starting out is when you want to pay up to get it right... the first time! Very important for a legitimate TTS business to remain a legitimate TTS business.
%% MAYBE the best $60\ checking it out[M Green /Green + Co]. Not sure that takes the place of tax lawyer\lawyers book/ looking for patterns I'm checking out Fred Dailys book today;Tax Savvy for Small Busines$; 50 years tax lawyer+ Money MAGAzine writer. I'm also keeping in mind an insure co like State Farm or Pro Co has a huge # of smaller insure companies in different locations/LOL maybe a state law thing??
I imagine most traders only hear about someone paying less than 5% on their trading proceeds and the theoretical no tax paid on profits, but that itemization you speak of is their attempt to get to that lower tax bill. The only way to truly lower your bill is to shell your LLP’s and trusts
%% OK\ also use ROTH IRA, back door roth, greenbelt farm property\ income tax free states. no way to get around gas tax unless one drive an EV + i dont/LOL Tax free muni bonds; may get a few more ideas out of an old tax lawyer book, even though some laws change