Tags: question, trading
Categorised in: Earn Online
A lot of traders open a broker account, but they have never asked themselves what kind they choose. When you want to apply
for a broker account, understand that there are many kinds of accounts not one. I will expose three types with their advantages
First individual account is a general account where if you make money, this profit will be added to your job income and then you get taxed
on the whole money you got. For example, your job income is 40k and you make 10k from stocks profits, so you be taxed on
50k a whole and this has a tax bracket. Now if you make a loss. You only can claim $3000 a year. So 40k – 3000 = Your taxable income
will be reduced to 37k which is typical good because you pay less tax.
Second, Roth Ira account where you dont pay any tax. But a disadvantage, you can not claim any loss. The good thing also
you can withdraw your contribution that you put at any time. Let say after 10 years you contributed 40k, so this 40k you can withdraw
without any tax, but the thing is you can not take your profits until your are 59 and 6 months.
The contribution for each year is $5500 a year if you are under 50 years. If above you can contribute $6500. These numbers can change
at any time.
Third, as a trader, you can apply for day trader status by applying directly to the IRS. You trader status will help you claim
all expenses like commissions and fees and deduct them from your income. Plus you can claim all your losses which is good because you will
pay less tax than those who have individual account.
Conclusion: Understand that if you are 3 friends and each one choose different account that means your tax will be so different.
So call your broker or your tax preparer and ask clarifications.
Please if you have questions, comment on this video or send me a direct question to my email below.
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