Schedule D

Hi all--

I am new to this forum and wondered if somebody could explain the benefits of being a self-employed trader under schedule D as opposed to being a salaried employee. I understand that it is possible to claim expenses being self-employed and this is a benefit. What other major benefits are there being a self-employed trader?

Thanks

 

your question doesnt make sense. need more details.

 

Hi..

I'm effectively trying to decide whether to start my career as a self-employed trader under schedule D (some prop firms offer this as an option) whilst others just offer a position based on a salaried scheme (tax and national insurance is deducted from bonus and basic before you are paid). I'm trying to establish which method would be in a trader's best interest.

Hope this makes things more clear.

 

Actually you have to be careful because some prop firms treat your gains and losses as Capital Gains/Losses, and other treat it as earned income. Under the Cap Gains treatment, you can only offset cap losses to cap gains or up to 3K in losses if you have no gains. Investment expenses can only be written off if they exceed I believe it's a 2.5% of gross income. And you can only write off the part that exceeds that %.

If the income is earned income then you can write off the expenses directly against the gains, but you must pay the self employment tax of 7.5%(don't quote me on the number).

Call an accountant to get his read, cause every accountant will most likely give you a different answer, depending on how aggressive or conservative they are.

 

And, of course, capital gains are taxed at a lower rate than earned income.

 

short term capital gains are taxed the same as earned income.

 

you better take the salary. if your a newbe you probably wont need to worry about taxes for a while anyhow. if you get profitable then you can look at options again.

 

Oh, yeah. I was thinking futures with their 60/40 long term/short term split. Thanks.