If you have worked at a prop shop before how did you handle taxes. I had lunch with someone at the firm I will be working at, but did not ask him about how he paid taxes. He did tell me they get paid gross wages, but I do not know if that means they have to pay social secuirty and medicare or whatever themselves. Thank you for your help.
you'll get a k-1 or 1099. if you get a 1099 thats bullshit as you have to pay fica taxes. file quarterly estimated taxes. the good part of being with a prop firm is no sch d.
With a K1 you get to pay everything all at once at the end of the year? No SS? What are quarterly estimates? Never had to file taxes. Thanks.
Depends on the 1099. The 1099 misc and what line they put it on is important for the fica tax. The 1099 B is what you get from a brokerage account and you don't have to pay the SS.
correct me if i'm wrong but don't most prop houses who give 1099's report it as 1099 misc?also i never understood why some prop houses give 1099's and others give k-1's. many older prop houses are changing there models dealing with unlicensed traders. they're either not taking deposits and getting a higher profit split or moving there llc's out of the country like bear capital and jc trading. even assent is no longer allowing unlicensed llc's that put traders under them. i guess bright feels vindicated.
Unless you are retail you will get a 1099 misc. The k-1 showed the trader as a partner and this is not allowed anymore. As far as the out of the country LLC, that is the loop hole right now. It will be fine but it only takes one disgruntle trader who trades in them to blow a whistle and ruin it. 1099 misc should show capital gains, not that you work for the llc.
With a 1099 are there more opportunities to claim expenses as write offs? I believe you can also contribute to retirement plan (IRA, SEP IRA, or solo 401k)
Same with a k-1 as they attach the sched-D. Difference is you wont get any surprise letters from uncle sam years later and then have to chase down the llc who you then find out changed their name or closed shop. Unfortunately people scheme and get cute. If you deal with professionals this situation wont take place.