It’s tax time and on April 17 and Uncle Sam want his money!
Before you spend all the money you jacked from the markets you need to know that Uncle Sam, the ultimate Jackboy, is going to get his money.
We don’t want any of you going out like Wesley Snipes so make sure you keep some coins from the stash to pay your taxes.
There are a few details as traders you need to be aware of so lets dive in!
You can save some money by handling your own taxes however it can be a real headache. You may risk being audited which will turn your headache into a brain tumor that can lead you to an early grave…Which we don’t want. Personally I advise traders to hire a CPA or Tax Lawyer to handle your personal tax situation.
So now that you are trading stocks and options you will notice that your tax process is a bit different than what you are accustomed to.
As a trader you will be taxed on the net profits you make in the markets. That money is called capital gains. The going rate on capital gains is no more than 15% for most taxpayers. Meanwhile average salary employees pay about 25%…smh..straight robbery. For the most part, traders pay less in taxes than employees.
Most of you traders reading this will be classified as an “investor” for tax purposes. Even though you are a trader you will be classified as an investor which doesn’t come with any benefits. So, no write offs for you.
Once you manage a large account, trade very frequent and consistent throughout the year then you may earn the elite “trader” status. Basically, you will enter this realm when trading is your business. You can write off losses and expenses like our Options Premium course for example. I mean this is where every trader wants to be. But give it some time and one day you may enter these ranks. #Goals!
The 1099-B is a very important form that you should receive from your brokerages that compiles all your trading activity for tax purposes so get familiar with it. If you are preparing your own tax through software like H&R Block or Turbo Tax, then this form makes your life easy. Just upload, verify, and submit. Obviously, as previously mentioned, the easiest route is to just hand this form over to your tax professional.
For all my procrastinators out there, If you’re going to need more time then make sure you file for an extension that will give you until October 15 to pay the piper. You can learn more about tax laws for traders at www.irs.gov. So get your docs together and get to filing ‘cause it’s tax time and on April 17 Uncle Sam says y’all better have his money!
Disclosure: Wallstreet Jackboyz does not provide tax advice and are not licensed tax professionals. We suggest that you consult with a tax-planning professional regarding your personal circumstances.