this thread is gonna be 100 pages long. I wonder why Active Trader did such an article after all this mag is about selling the dream of making a living trading ! well now we know the truth brokers won't ever tell you
lmao a true trader woiuld use green 100-1 over local accountants. green knows the laws 500-1 over any local accountant. go get greens sample returns and see the meticulous 30 or so foot notes. 99% of cpa's know zip about trader tax laws. 99% of cpa's would say if you file a sch c you msut pay social security tax as a trader
One of the most important thing for a trader (good or bad, profitable or not) is to make sure his/her record is clean for tax purposes. Using an accountant who knows his/her stuff could help. Audit by the tax dept. is not something funny. On the other hand, having loses in trading could be useful for some non-traders to utilize the loss in a way only a specialist can help
Think back to when you first started trading, were you concerned with your overhead costs, charting software, exchange fees, commissions, I know i wasn't. I opened a 10k account with etrade, used nextrend for charting, $100.00, commissions were around $10.00. One year of software ate over 10% of my account equity. Then added in commissions. I did make money but alot of it went to pay for overhead costs. The point I am trying to make if I could do it all over would be to keep my overhead cost no more than 2% annually of my account equity. But it was so easy to fall into that trap, of if I had this and if I had that, I would be a better trader. 5 years later my operation is so simple and my costs are so low, I think im going to make it.
It's true. There's a huge difference between the 'success' of a person who lives off their winnings who has a million-dollar account and makes $50,000 a year versus someone who has a $10,000 or $50,000 account and earns $50,000. As far as a "low-paying living" is it presumed trading any account size? Or, is a low-cap account taken into consideration here? In other words, making $25,000 a year off a $25,000 account size is doing MUCH better than making $25k off of a $1,000,000 account size. The later is a more accurate depiction of making a "low-paying living."
Well .. it just isn't so ... especially if you work around the exchanges ... there are many very able accounting firms - including the majors - that know all of the applicable regulations for all types of markets and trading instruments ..... and they dont disclose anything regarding their clients ... zip zero nada ..
I rather be the guy with 1,000,000 bucks in my bank account and you can be the super star trader making 25k off your 25k. Itâs all piker talk. The most depressing thing is I am the top 11% and I did not make that much last year. If youâre trading 10 years and you only have 25k as a fulltime trader and you think youâre great because each year you make 25k to live on you should kill yourself.
I don't get the same numbers from my accountant. He handles some of the biggest gorillas in Chicago's pits as well as others who have been in it for a while. The stats that he and I have discussed earlier this summer don't sound at all like Green's. I think that stats will give you whatever you want them to. I think Green's stats speak of his clients only (which I wouldn't necessarily consider to be a sample of the greater picture). I have had the opportunity to meet numerous traders in Chicago and I often discuss this with them (taxes are always a big topic). I haven't heard Green's name mentioned any where before I arrived at ET. I think the stats only speak for his clients and wouldn't make a comprehensive enough sample, in my opinion.
As an aside. back when it mattered to me a very large firm who handled Van Buren Securties accounting in Chicago was horribly underinformed about taxes. They did not really understand the tax code at all. I spoke with a few accountants including the top tax partner at the firm. When he realized I knew more than he did he said he would get back to me and never did. (by the way I do not claim to know much I just looked up the code as was suggested to me buy a guy like green.) All the Chicago guys understood was that I was a trader. That was my job, I had to pay fica. I said ok try this. I sell my stock to a specialist and I do not deal to the public. No difference. I said ok. lets say I sell fine wines. I have a lot of inventory and I also make money selling wine as a sales rep. I said ok. now one year i sell none of my wine and just do my sales rep job. I pay fica right, agreed. Ok. now next year I sell some of my wine. Some I have held for two years. some for 6 mos. And I make 10 thou as a sale rep. What do I pay fica on. He refused to answer. I brought up the applicable code and they just did not get it. Maybe by now they do. But I would venture to day I would not want my taxes done at a firm that is used to doing floor traders taxes if I am an off the floor trader.