How Do Profitable Traders Save on Their Taxes?

Stock trading is an up-and-down endeavor and investors can win big, lose it all or maintain an even keel. For those investors that achieve a high level of success and become profitable traders the next trick is to learn how to save on taxes. That can be a completely different game in and of itself. So what can you do to keep your tax bill down if you have been a profitable investor?
There are many strategies that successful investors employ to save on taxes, including deducting their home office expenses. Many traders work out of their home and that means they can deduct their work space, their electronic equipment and several other items. It could be as much as 10 – 20 percent of their home. This can be a very helpful deduction for investors as well as anyone who works out if their home.
Another smart move that successful traders make is to deduct their business travel, as well as their expenses for seminars and education. Many traders can also deduct their health insurance premiums. Retirement plan contributions can also be tax deductible if a trader qualifies for tax trader status. He/she also has to use an S-Corp or C-Corp management company to qualify. As for highly successful traders with a lot of income, they should consider a defined-benefit plan. These plans can allow for much larger tax-deductible contributions.
One other smart move is to save on taxes with long-term capital gains. If you hold an investment for 12 months or longer your capital gains tax rate is lower than when you sell an asset that you’ve held for less than a year. All of these steps are possible options for traders who want to cut back on their tax bill. You can contact GROCO to learn more about these and other tax-saving options. Call us at 1-877-CPA-2206
Land Management: Conservation Easements
Land Management: Conservation Easements Real property–land and the home or other structures on it–often has special significance to the family that owns it, to the surrounding community or to the ecology of the area. It may have played a role in an historical event; provide habitat for wildlife; command a magnificent view; or offer access…
Personal Finance 101
Personal Finance 101 The subject of personal finance is very broad, but as a beginning, I would like to discuss what I consider the foundations of personal finance: Security, Stability, Growth and Protection & Management. Security Security to me means that I am prepared for the “hit by a bus” scenario. I have life insurance…
Saving for Retirement: 5 Steps to Building Significant Wealth
Saving for Retirement: 5 Steps to Building Significant Wealth Are you saving enough money for retirement? Do you know how much money you need to accumulate in order to retire? Are you concerned about how you should be saving for retirement? The simplicity of these questions can lead many people to believe that there is…
The Bypass Trust: Using Disclaimers to Manage Large IRA Balances
The Bypass IRA Trust: Using Disclaimers to Manage Large IRA Balances By Mary Kay Foss California CPA, December 2001Trying to fund a bypass trust can be problematic if clients only have a residence and a large retirement plan as their major assets. On the surface, a residence isn’t a good asset for a bypass trust…