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Zecco.com » General Investing » Tax Matters » Incorporate to get best tax rates?
Last post 05-09-2008, 7:57 AM by sdrfla. 3 replies.
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  •  05-08-2008, 8:53 AM 28712

    Incorporate to get best tax rates?

    Reply Quote
    If trading is your only source of annual income (no other jobs held); what is the best thing to do for tax purposes?

    -File as individual? 
    -Incorporate?
    -What about social security taxes & FICA, etc.?

  •  05-08-2008, 9:28 AM 28716 in reply to 28712

    Re: Incorporate to get best tax rates?

    Reply Quote

    I don't know about incorporating, but I think that would be a definite NO.  Because then you would have to pay corporate taxes on the income you produce and also on the capital gains.  Some stocks get taxed at  the regular and not the capital gains rate ( or they are trusts and/or ETF's, or mutual funds).  I am trying to make trading my income also, I think I am going to start trading futures options with a broker that can give advice and answer questions on trades I will consider.  I have a broker now who handles those but after a stellar start he has fizzled and seems like he doesn't know my  name anymore.  Plus to boot their commission is ridiculous for what I am now receiving.  Sorry I went off on a tangent.  About the social security and FICA, since you would file as an individual and be reporting the income as capital gains, that is all that gets taken.  There is no social security or FICA that gets taken as far as I have read.  (This was info I read in my TaxAct software).  But I think there might be more to it also.  I might have had to quit working on my return and do something else(it is still not done yet).  As far as incorporate, that would fall under the previous sentence.  I don't know.  But so far it seems the way to go is just file as an individual.  Of course I am not a CPA or tax preparer or an accountant so you should do some investigating for your situation to get solid answers. 

    Good luck with it and may you pay less tax than last year and even less next year.

    Eliminate tax corruption. Support the FairTax and know freedom and liberty as intended by our forefathers. Make April 15th just another spring day. Get big brother out of your finances. All debts public or private. FairTax.org for details.

  •  05-08-2008, 9:49 AM 28718 in reply to 28712

    Re: Incorporate to get best tax rates?

    Reply Quote
    The true answer?  It depends.  If I were you, I'd start here... http://www.irs.gov/

  •  05-09-2008, 7:57 AM 28798 in reply to 28718

    Re: Incorporate to get best tax rates?

    Reply Quote
    Thanks for the link.

    So based on these two lines from that link: 

    "An investor is not subject to self-employment tax."

    and

    "Gains and losses from selling securities as part of a trading business are not subject to self–employment tax."

    it seems that neither scenario has a need to pay social security or fica, etc?  Only cap-gains?
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