By: Montana Timpson
Filing tax returns has never been a simple task — especially for professional traders. The implementation of 2017’s Tax Cuts and Jobs Act (TCJA), coupled with predicted upcoming reform in President Joe Biden’s proposed tax plan, leaves much to be determined in months to come. However, with the 2020 tax filing season upon us, we’re outlining key tips for professional traders as they navigate the 2020 tax return period.
5 Tax Tips Investors Might Be Missing
Despite major tax amendments to the Internal Revenue Code in 2017’s Tax Cuts and Jobs Act (TCJA), many tried-and-true tax strategies remain effective for professional traders. Maximizing 401(k) contributions, for one, will still result in a lower tax rate over time, despite changes in the TCJA. Capital gains tax has been slightly reworked under the TCJA, too, but selling a losing investment before the end of the year may remain an effective strategy for lowering taxes, as well.
The Tax Benefits of Entities for Traders
Employee benefit deductions saw changes in 2017, but creating a legal trading entity is still a great option for professional traders seeking beneficial tax treatment and asset protection. Trader tax status (TTS) is a qualifying rank that, when met, constitutes fortuitous tax benefits and additional business expense advantages for qualified corporate entities. Consider classifying your trading account as a legal business for maximum tax benefits.
The Tax Cuts and Jobs Act for Investors, Traders and Investment Managers
Last year, CPA Robert Green of Green Trader Tax joined Lightspeed to present a webinar that covered the tax reform changes under the TCJA, detailing its impact on investors, traders and investment managers.
This year, Green joins Lightspeed again in an upcoming tax webinar, Tips for Professional Traders Getting Ready to File 2020 Tax Returns, giving professional traders a live look at how President-elect Joe Biden’s proposed tax plan might affect income tax changes in the years to come, Trader Tax Status qualifications, capital gains rates, broker 1099-Bs and more.
For additional professional trading tips, guides and resources, visit Lightspeed’s Active Trading Blog and register now for Lightspeed’s live tax webinar. For more information on professional trading with Lightspeed, call us at 1-888-577-3123, request a demo, or open an account today.
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Lightspeed Financial Services Group LLC does not hold itself as a tax expert. Regarding any tax related information contained within this webinar and any other tax related items, please consult with your tax advisor.
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