Sunday, March 9, 2008

Trading stock options is not self-employment

Hi June,

First, I just finished your book “Self-employed Tax Solutions” and was impressed how clearly you presented a tax code that is so screwed up, it is an embarrassment to anyone associated with writing or enforcing it. Your book answered most of my questions on self-employment and I thank you for that.

I do have a question, though, on being self-employed. I lost my job as a supervisor last year due to the plant closing and have been living off the profit I am making on trading stock options.

My wife has a part time job, however, all our living is coming off my investments.

At tax time, can I just state that I am unemployed and pay regular taxes on my investment income or do I need to pay SE tax and treat the trading as a business?

I am 54 and living in PA and would not have many deductions if I were forced to list my trading as a business. Any thoughts on this or maybe claiming early retirement?

Thanks for any help,

Hi Bob,

are unemployed and enjoying the fruits of your previous labor. You are not self-employed. Here's a question from another trader If you are your only client ... you're not self-employed.

Glad you found my book to be so accessible. Thanks for letting me know.

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