Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

TinGull

Tax issues for United States

Recommended Posts

Hi there,

 

Just curious as to those of you in the US who trade futures ONLY do your taxes by yourself or have someone else do them? And...how much does it usually cost to have someone do them for you? I've only been trading as a business since September and have maybe 60 trades to account for under that. Is it worth having someone else do it so it doesnt get messed up?

 

Thanks all!

 

Chris

Share this post


Link to post
Share on other sites
Cool. I figure I prolly won't get audited for 3 months worth of trading...

 

You recommend doing a hometown accountant? Or something like a big box H&R Block or something?

 

I use a local guy, he's not a powerhouse or anything but he's smart and really good at what he does. I used turbotax and him to compare he maximized my deductions and got me 2.5x what turbo tax estimated.

Share this post


Link to post
Share on other sites

My experiences with H&R are not good. High standard fees for a mediocre return. My dad used to handle a lot of tax returns for various organizations and he had to leave a local cpa due to performance issues. I did some fishing and found a great local cpa who dishes out advice. I've never meet an accountant who could offer any advice at a place like H&R.

 

I guess like most things you have to spot out the quality accountant to suit your needs whether its at an H&R Block or whatever.

Share this post


Link to post
Share on other sites
Guest cooter

It's a blended US tax rate of 23% regardless of amount earned, plus state taxes, for futures traders.

 

Another reason to consider moving to Florida when you get really good at it (no state taxes).

 

More info: CBOT - Taxes for Active Futures Traders

 

It's a recent 2007 seminar on Taxes for Futures Traders, by tax accountant Robert Green.

 

Slides are here: http://www.cbot.com/cbot/docs/80257.pdf

 

And for those who don't want to register for the event, to view it try this link here:

 

http://mediasrv1.cbot.com/02062007_green

 

Or follow the instructions at this link here if that doesn't work out for you:

 

http://www.traderslaboratory.com/forums/f30/cbot-video-archives-924.html#post10827

 

-cooter

Share this post


Link to post
Share on other sites

tin - I would not touch your H&R Block, Jackson Hewitt's, etc. out there. They are not going to know a thing about futures taxes. Odds are you know more than they do. :confused:

 

My opinion is that if you want the best tax treatment, you need to find the best. If you want local, get on google and see what's near you. For me, there are some major tax firms that are 'local' so I started there - Ernst and Young, etc. - firms like that.

 

If you can find a local guy that knows what he's doing, great!! Just keep in mind that very few 'jack of all trades' cpa's out there deal with direct futures trades. It's just not common at all. I would put together a list of interview questions so you can screen some guys out. The most basic question - what is your understanding of how futures day trading is taxed? In other words Mr. CPA, if I hold a futures trade for 5 minutes and make money, how am I taxed?

 

... very basic question that anyone with a tad of knowledge about futures should be able to ask, but if they can't answer that, time to go. You'd be surprised how many assume that futures are just like stocks and therefore, you'd be taxed at all short-term gains on that trade. That is a VERY costly mistake obviously.

 

There's also some firms that are specifically built around traders, but probably not local to you. I would check them out as well. I've read good things about http://www.greencompany.com/ I cannot speak on their behalf, so do your own due diligence.

 

Taxes are a MAJOR consideration when running a profitable futures trading business. How your taxes are prepared can literally increase/decrease your final year-end P&L by thousands of dollars.

Share this post


Link to post
Share on other sites

I can't speak directly about the US because your tax laws differ from ours in Australia but I know don't use H&R Block they suck the big one. I've paid them $150 bucks for a basic tax time deduction number crunch and they came up with $30 bucks of deductions once..... go figure.

 

In the USA if you conduct 30 round trip trader within a year do you get classified as a professional trader? Here in Aus if you do, then you get your tax rate capped at 30% and no medicare levy. Also your losses become tax deductible which is a bonus.

 

If there is a similar system in the US, then you can use your favourable taxation position to siphon off your excess profits and direct them into long term investments such as managed funds or shares which can produce tax effective income streams as well to further help reduce the overall volatilty of your income.

Share this post


Link to post
Share on other sites

You need a guy that knows his stuff. I have seen many traders get nailed from the IRS for poor records and deductions they could not take. I know one individual that made over 3000 trades in 9 months, he took the last 3 months of the year off for a reward and when filed his taxes he claimed "Trader Status" and it was denied. The guy made his entire income from trading, he did it more than any other activity but when he took 3 months off he didnt qualify.

 

It is best to get yourself structured (Nevada or Wyoming) and go from there.

Just make sure that the people you use to set you us and the accountant you use is a business accountant so you can take full advantage of the tax laws available to businesses in this country.

Later

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • GFL Environmental stock, watch for a top of range breakout at https://stockconsultant.com/?GFL
    • PLBY Group stock watch, nice trend with a pullback to 1.83 gap support area, bullish indicators at https://stockconsultant.com/?PLBY
    • Date: 24th February 2025.   German Markets Surge as Friedrich Merz Set To Be Chancellor, Euro Gains on Fiscal Shift   Germany’s stock index futures and the euro rallied after opposition leader Friedrich Merz secured victory. Investors expect a shift toward increased government spending. US-China trade tensions rise as Trump tightens restrictions on Chinese investments. AI optimism fuels Chinese tech stocks despite regulatory concerns. Nvidia’s earnings report on Wednesday is expected to impact market volatility. German Markets React to Election Results Germany’s stock market and currency experienced a sharp rally in Asian trading after conservative leader Friedrich Merz won the country’s federal election. This victory aligns with pre-election polls and signals a potential departure from Germany’s traditionally strict fiscal policies. Futures tied to the DAX Index surged as much as 1.5% on Monday, recovering from early losses in a session marked by thin trading volume. Meanwhile, the euro strengthened against most major currencies, climbing 0.7% against the U.S. dollar. Market analysts believe Merz’s leadership could mark the end of Germany’s tight fiscal stance, with expectations that his administration will prioritize economic stimulus. This shift comes at a critical time, as Europe’s largest economy grapples with sluggish growth, geopolitical uncertainties, and the threat of a global trade war under U.S. President Donald Trump. The euro’s strength also reflects optimism that Merz will form a government quickly, which wasn’t a widely held expectation before the election.     US-China Trade Tensions Intensify While European markets gained, US-China trade tensions escalated as Trump ordered stricter regulations on Chinese investments in key sectors, including technology, energy, and infrastructure. The move is part of a broader strategy to limit China’s influence in strategic industries. Although not legally binding, the directive strengthens oversight by the Committee on Foreign Investment in the United States (CFIUS), a panel responsible for reviewing foreign acquisitions. JPMorgan strategists warned that this decision could reverse gains in Chinese tech stocks, which had rallied earlier in the year. Despite geopolitical headwinds, Chinese technology stocks have posted strong gains this year, largely driven by optimism in artificial intelligence (AI) and key policy shifts. The market remains under-owned by global investors, suggesting potential for further capital inflows. The growing AI industry has helped offset risks from US tariffs, with investor sentiment remaining bullish on leading Chinese firms like Alibaba and Tencent. Chinese officials reacted strongly, with Vice Premier He Lifeng raising concerns about Trump’s recent 10% tariff hike on Chinese goods in a call with US Treasury Secretary Scott Bessent. Additionally, sources revealed that Trump’s administration urged Mexico to impose tariffs on Chinese imports as part of broader trade negotiations.   Despite these challenges, investor focus remains on Nvidia’s earnings report on Wednesday, a key event that could drive market volatility.   Gold Nears Record Highs on Inflation and Central Bank Demand Gold prices held near $2,940 an ounce, just shy of last week’s record, as ETF inflows surged and the US dollar weakened. The precious metal is on its longest winning streak since 2020, fueled by rising inflation expectations and mounting geopolitical uncertainties under Trump’s administration. Lower US Treasury yields have also boosted bullion’s appeal, with traders now expecting the Federal Reserve’s first rate cut in July rather than September. Markets will closely watch Friday’s inflation data, a key indicator for Fed policy direction. Final Thoughts Markets are reacting to a mix of political and economic shifts, with Germany’s election outcome boosting European equities while US-China trade tensions create uncertainty for Asian markets. Investors will be closely monitoring fiscal policy changes in Germany, Nvidia’s earnings, and further trade developments for insights into market direction. For more financial market insights and updates, stay tuned. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE! Click HERE to READ more Market news.   Andria Pichidi HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • INO Inovio Pharmaceuticals stock, holding strong, watch for a bottom breakout above 2.36 at https://stockconsultant.com/?INO
    • Date: 21st February 2025.   European PMI Disappoint, Weighing on Euro Before German Elections   The Euro is the first currency to witness the volatility on this month’s PMI reports. The French, German and British PMI data have resulted in the Euro being the worst-performing currency of the European Session so far. However, will the Euro continue to decline throughout the day? European Purchasing Managers’ Indexes The French Purchasing Managers Index was the first European index to be made public. The release resulted in the Euro instantly declining 0.24%. The main concern from the French data was the Services PMI which fell from 48.2 to 44.5. Previously the market was expecting the data to remain more or less unchanged. The weak data triggered the decline which came to a halt after Germany’s PMI was released.     The German Manufacturing PMI read 0.5 points higher than previous expectations and the Services PMI was 0.2 points lower. The data from Germany was a relief for Euro investors and the price rose 0.12% higher. However, traders should note that the price of the EURUSD continues to remain 0.20% lower than yesterday’s close. The price of the EURUSD will now depend on the PMI data from the US. The value of the US Dollar will depend on its PMI release this afternoon and the Consumer Sentiment Index. Analysts expect both the US Services and Manufacturing PMI data to remain above the 50.00 level in the expansion zone. German Elections 2 Days Away Germany is set to hold a general election this Sunday, February 23rd, following the collapse of the coalition of social democrats, liberals, and greens. Given the country's highly proportional electoral system, German polls provide a strong indication of potential government formations post-election. The main concern for Germany is the AFD party who are Far-Right Nationalists. Currently, ahead in the polls are CDU (centre-right), and AFD (far right), followed by the SPD (centre-left). Traders should note that the results of the elections are likely to trigger strong volatility on Monday, but also influence volatility today. Economists may become further concerned if the far-right gains power for the first time due to uncertainty. If the government, similar to France, is unable to form a coalition, this would also be a concern for the Eurozone. Furthermore, the Euro this week is also under pressure from comments from members of the European Central Bank. ECB Governing Council member Fabio Panetta said to journalists that officials need not slow interest rate cuts, as January's 2.5% inflation is still expected to reach the 2.0% target this year. He also advised the European economy is weaker than previously expected. EURUSD - Technical Analysis and Indicators The EURUSD is trading above the 75-bar Exponential Moving Average and 100-bar Simple Moving Average on the 2-hour chart. However, the price is moving away from the key resistance level at 1.05058 indicating the price is losing momentum. The short-term volatility is indicating the price is retracing downwards. On the 5-minute timeframe, the price is trading below the 200-bar SMA and is also forming clear lower lows and highs. Simultaneously, the US Dollar Index is trading above the 200-bar SMA on the 5-minute chart confirming no current conflicts. Currently, the US Dollar is the best-performing currency of the day attempting to regain losses from the past 2 weeks. Watch today’s Live Analysis Session for more signals as they develop!   Key Takeaway Points: Weak French Services PMI triggered an initial Euro decline, but German PMI provide a slight relief. However, EURUSD remains lower than yesterday’s close. The Euro’s direction now depends on the US PMI reports, with analysts expecting US data to stay in expansion territory. Sunday's German election could drive volatility, especially if the far-right AFD gains power or if coalition formation proves difficult. ECB official Fabio Panetta suggested no need to slow rate cuts, citing weaker-than-expected economic performance and expected inflation decline. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.