Daytrader capital gains tax?

briana-rbriana-r
in Business & Finance

Hi started trading the E-mini futures market and if I become a full time trader I would like to know what kind of taxes I would have to pay. I dont know if there are special taxes for the futures market considering these are very quick gains.

thanks in advance

Update:

So your saying if i continue trading on my own for now I would be paying 30% no matter how much im making?

Comments

  • taxmantaxman

    If you become a "professional" trader, all rules change. The whole thing is treated as a business. You take all of your gains and offset them with all of your losses. There are no more "long-term" and "short-term". There is no more "wash-sale". Then, you subtract all fees you paid and all expenses you incur, just like a business. You will record the gains, losses, and expenses on Schedule C. You will pay ordinary income and Self-employment taxes on your net gains.

    If you don't do this "professionally", then all those trades will simply be short-term. There is no micro-term category. If you own something for a nanosecond before you sell it, it is considered short-term just like if you held it for 364 days.

    In regards to your 30% question, I'm not exactly sure what you mean. If you aren't in the business of trading, all gains are taxed at your marginal rate. This starts out at 10% and grows to 35%. In addition, your state may tax income from trades too.

    However, like everyone else, you get deductions and exemptions. For example, if you are single and don't support anyone but yourself, even if you don't own a house, you still don't pay any tax on the first $8,750 of income ($5,350 for standard deduction and $3,400 for one personal exemption). Then, the next $7,825 of income is taxed at 10% and so on. I'm not sure where the 30% came from. The highest tax rate is 35%, but you'd have to be making some large bills for that rate to kick in. Remember, going from one rate to the next doesn't mean that everything is taxed at the new rate, only the money earned above the threshold.

    For example, if you had a net profit (gains minus loses) (all short-term) of $20,000, your tax would be $1,296.25. 0% of $8,750 + 10% of $7,825 + 15% of $3,425.

  • joshua-gray_60c2ac7d09e9ajoshua-gray_60c2ac7d09e9a

    tma is right for short term capital good points fee, and for long term additionally for many products. On collectibles, the max fee on long term cap good points is 28%. a pair kinds of corporation good points even have diverse lt expenses than the 5/15%.

  • spock-rhpspock-rhp

    you need professional advice

    question is whether to register with IRS as in the business of trading.

    loses the cap gains tax rate [it is your inventory] but lets you write off your costs on schedule C instead of schedule A

    lots of other possibilities, too. -- form an LLC, for example.

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