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#1
11-15-2005, 01:16 PM
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SE Tax and Social Security?
The money I will pay if i file as a pro called SE tax... it is my understanding that this is a social security tax and that i will get all of this money back at a later date?... is this correct or do i only get a portion of it back? and what about inflation? i am only 19 and wont retire and get this money for 40 years, and 40 years ago a candy bar costed a nickle, so is this whole thing a scam like everything else the government controls?
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#2
11-15-2005, 01:44 PM
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Re: SE Tax and Social Security?
pretty much, theres a lot of ways tho to minimize it....
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#3
11-15-2005, 01:57 PM
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Re: SE Tax and Social Security?
[ QUOTE ]
pretty much, theres a lot of ways tho to minimize it.... [/ QUOTE ] how can you minimize it?
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#4
11-15-2005, 03:00 PM
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Re: SE Tax and Social Security?
[ QUOTE ]
[ QUOTE ] pretty much, theres a lot of ways tho to minimize it.... [/ QUOTE ] how can you minimize it? [/ QUOTE ] Create a corporation, typically a LLC or a S corp. Run all your earnings through it. Write off as many expenses as are reasonable, office, computer, travel, publications, other gambling losses, possibly even your car. Basically just filing as a professional gambler does the same. Consult with a tax advisor to ensure the reasonableness of your writeoffs. Also, setup an individual 401k, and you can save up to $42k income tax free. But you still have to pay SE tax on those earnings.
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#5
11-15-2005, 03:20 PM
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Re: SE Tax and Social Security?
[ QUOTE ]
Also, setup an individual 401k, and you can save up to $42k income tax free. But you still have to pay SE tax on those earnings. [/ QUOTE ] Can i set this up online with TDWaterhouse? OT Question: Is it better to sell you stocks when you dont have any other earned income for the year (taxed at a lower rate??)
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#6
11-15-2005, 03:44 PM
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Re: SE Tax and Social Security?
[ QUOTE ]
[ QUOTE ] Also, setup an individual 401k, and you can save up to $42k income tax free. But you still have to pay SE tax on those earnings. [/ QUOTE ] Can i set this up online with TDWaterhouse? OT Question: Is it better to sell you stocks when you dont have any other earned income for the year (taxed at a lower rate??) [/ QUOTE ] Don't know, my broker is Ameritrade and they didn't offer it so I had to set one up with Fidelity. You'll have to check with TD. Second question is a little more complicated. Once you have held a stock for one year, you automatically get the long term capital gains rate, which is 15%. If you have held the stock for less than a year, you get short term capital gains, which is basically the same as your regular income rate. There are exceptions, so if you are in a very low tax bracket you could pay just 5% on long term gains. And I'm just discussing your federal taxes. Every state taxes income differently.
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#7
11-15-2005, 03:45 PM
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Re: SE Tax and Social Security?
depends, most likey you don't have trader status so your gains are taxed as captial gains(losses)....but if your not its taxed as ordinary income.....desertcat is right about most of it, there are a few other things you can write off (health insurance, food)...some of it is a pain but its worth it when you see how much you save(this yr im deducting close to 40k)
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#8
11-16-2005, 12:23 AM
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Re: SE Tax and Social Security?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] pretty much, theres a lot of ways tho to minimize it.... [/ QUOTE ] how can you minimize it? [/ QUOTE ] Create a corporation, typically a LLC or a S corp. Run all your earnings through it. Write off as many expenses as are reasonable, office, computer, travel, publications, other gambling losses, possibly even your car. Basically just filing as a professional gambler does the same. Consult with a tax advisor to ensure the reasonableness of your writeoffs. Also, setup an individual 401k, and you can save up to $42k income tax free. But you still have to pay SE tax on those earnings. [/ QUOTE ] Do you have any articles on creating LLC or S Corp as a professional gambler? how is this more effecient then just filing as a pro? thanks.
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#9
11-16-2005, 12:41 AM
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Re: SE Tax and Social Security?
[ QUOTE ]
Do you have any articles on creating LLC or S Corp as a professional gambler? how is this more effecient then just filing as a pro? thanks. [/ QUOTE ] There is a gamblers guide to taxes that's been recommended on the internet forum. I'm not an expert, but I think that the benefit is in being able to put away extra retirement monies. Read the book, then talk to a real accountant, it sounds like it will be worth the cost and time to you.
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#10
11-16-2005, 12:54 AM
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Re: SE Tax and Social Security?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] pretty much, theres a lot of ways tho to minimize it.... [/ QUOTE ] how can you minimize it? [/ QUOTE ] Create a corporation, typically a LLC or a S corp. Run all your earnings through it. Write off as many expenses as are reasonable, office, computer, travel, publications, other gambling losses, possibly even your car. Basically just filing as a professional gambler does the same. Consult with a tax advisor to ensure the reasonableness of your writeoffs. Also, setup an individual 401k, and you can save up to $42k income tax free. But you still have to pay SE tax on those earnings. [/ QUOTE ] Desert, you are a wealth of information. One question. You can't have both an individual 401K and a SEP right? Basically you can only shelter 42K through a qualified retirement account, not 84K correct? Thanks for the clarification. Krishan
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