Frequently Asked Questions

Our tax specialists can help you navigate any scenario.


When is tax incurred?

Taxes are incurred upon the sell of an investment (i.e. currency, stock, etc...).

When are taxes due?

Taxes are due April 15. Depending upon the prior year's tax liability a taxpayer may be required to pay quarterly estimated taxes.

What are the most common types of tax penalties?

Tax penalties are most commonly assessed for the following:

Only applies if estimated taxes are required.

Tax distinctions between casual and active day traders?

In general terms a casual trader does not rely upon trading as their livelihood. A casual trader is typically viewed as an investor and is therefore limited in its viability to deduct all of the expenses related to investing.

The IRS typically classifies an active trader as one who daily seeks profit from movements in the market, has substantial activity in trading and carries on trading activity with continuity and regularity.

What are the different types of tax preparation?

This type of preparer typically uses Turbo Tax or a free option online and is not educated in the variety of the basic deductions related to the complexity of a trader. Therefore, the taxpayer will overpay their taxes.

This type of tax preparer is usually educated on general tax deductions but not on all the options available to a trader.

This type of tax preparer is aware of the best options available for a trader including setting the type of entity that will maximize all the possible deductions related to trading.

What are the differences in tax entities?

Deductions are limited to Schedule A which are only direct expenses and are only deductible if they exceed 2% of adjusted gross income.

Deductions are reported on Schedule C and can include all expenses related to trading. However, this type of reporting is typically only available to active traders. If not reported correctly this form is more susceptible to audits.

All deductions are available including home office and retirement (not available as a sole proprietor).

Similar to LLC. The IRS does require S Corps to pay their officers a W2 income. In addition, SCorps can be set up with an LLC to maximize deductions and provide an extra layer of protection.

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