Hello June,
I've read your book, Self-employed Tax Solutions, and have visited your web site many times and have taken away much information. I am, however, looking for a little clarification on one issue.
I was self-employed as a Supervisor up until January of this year when my assignment ended. From that time on I have been making a living by trading options in the stock market. On one of your past answers you stated that the IRS does not consider you self-employed if you are living off investment income which is fine with me.
However, since I make around 30 trades a month and have projected a six figure income by next year, I have been told that the IRS will consider my efforts as being self-employed and I will have to pay SE tax. Do you agree?
Thanks for your time and useful information,
Bob Whitehall, PA
Hi Bob,
I think your are mixing apple stock with peach options.
Amount of investment income does not determine whether one is self-employed or not. The IRS may more readily scrutinize someone with substantial investment income and large self-employment losses over someone with the same losses but little or no investment income.
What I think you are asking is about someone who invests only for himself rather than someone who provides investment services for others. If you invest only for yourself you are not self employed no matter how many transactions nor how much money is involved. Your income is not subject to self- employment tax.
Take a look at these posts for more clarification INVESTOR-TRADER .
Best,
June
Showing posts with label DAY TRADER. Show all posts
Showing posts with label DAY TRADER. Show all posts
Monday, June 23, 2008
Tuesday, April 15, 2008
What do an options trader and a stay-at-home mom have in common?
Hi June,
I ran into a problem while making a high end purchase that I hope you can help me with.
I am unemployed and living off the option trading I do each month in the stock market. If I am right, living off investment income does not mean I am self-employed even though it is my only source of income. If that is the case, and I hope it is, what do I list on a credit application for employer?
Do I still say self-employed since I am making more money than when I worked at a full time job or do I list “none” and get rejected?
I appreciate the help and enjoy your web site even if I am not officially self-employed.
Thanks,
Bob
Whitehall, PA
Hello Bob,
Correct. Living off investment income is not the same as being self-employed. It's as different as a jazz musician and a trust fund baby. Take a look at Trading stock options is not self-employment on this blog.
Unemployed is not the same as self-employed, although there may be a few similarities. Let's see ... you determine your work or non work-hours, nobody pays you for sick days, income is never definite.You are not self-employed. You are not employed. You don't have an employer. You have no earned income. Your situation is similar to that of a stay-at-home mom when she tries to get a charge card or other forms of credit in her own name.
You say you make more investing that you did at a regular job. You don't say what is your "high end purchase." If you're trying for a mortgage you may need to request a non-income verification loan. Then the bank will look at your assets rather than your earned income. Or, depending on your asset value, there's always a margin loan.
Best,
June
I ran into a problem while making a high end purchase that I hope you can help me with.
I am unemployed and living off the option trading I do each month in the stock market. If I am right, living off investment income does not mean I am self-employed even though it is my only source of income. If that is the case, and I hope it is, what do I list on a credit application for employer?
Do I still say self-employed since I am making more money than when I worked at a full time job or do I list “none” and get rejected?
I appreciate the help and enjoy your web site even if I am not officially self-employed.
Thanks,
Bob
Whitehall, PA
Hello Bob,
Correct. Living off investment income is not the same as being self-employed. It's as different as a jazz musician and a trust fund baby. Take a look at Trading stock options is not self-employment on this blog.
Unemployed is not the same as self-employed, although there may be a few similarities. Let's see ... you determine your work or non work-hours, nobody pays you for sick days, income is never definite.You are not self-employed. You are not employed. You don't have an employer. You have no earned income. Your situation is similar to that of a stay-at-home mom when she tries to get a charge card or other forms of credit in her own name.
You say you make more investing that you did at a regular job. You don't say what is your "high end purchase." If you're trying for a mortgage you may need to request a non-income verification loan. Then the bank will look at your assets rather than your earned income. Or, depending on your asset value, there's always a margin loan.
Best,
June
Friday, June 1, 2007
If you are your only client ... you're not self-employed.
June --
As a forex day trader; may I open a self employed 401K account; fund it with whatever the allowable contribution might be - - - and then proceed to conduct the same day trading activity within the confines of the 401K account - - - realizing the tax deferral benefits on any gains?
Thank you. DD
Hello DD,
A 401-K is a pension or retirement account. A 401-k for a self-employed is called a uni-k or solo-k and is only one kind of pension plan available to indies.
In order to be eligible to have a self-employed pension you must be self employed. That's explained at this post Self-employed or Employee: It's more than a name . A day trader -- whether domestic or foreign -- who trades only for himself and does not have a commodities license is not a self-employed.
Good idea but it won't fly.
Best, June
To learn more about indie taxes and Self-employed Tax Solutions please visit http://www.junewalkeronline.com
As a forex day trader; may I open a self employed 401K account; fund it with whatever the allowable contribution might be - - - and then proceed to conduct the same day trading activity within the confines of the 401K account - - - realizing the tax deferral benefits on any gains?
Thank you. DD
Hello DD,
A 401-K is a pension or retirement account. A 401-k for a self-employed is called a uni-k or solo-k and is only one kind of pension plan available to indies.
In order to be eligible to have a self-employed pension you must be self employed. That's explained at this post Self-employed or Employee: It's more than a name . A day trader -- whether domestic or foreign -- who trades only for himself and does not have a commodities license is not a self-employed.
Good idea but it won't fly.
Best, June
To learn more about indie taxes and Self-employed Tax Solutions please visit http://www.junewalkeronline.com
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