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How Traders Maximize Tax Benefits Q&A

How Traders Maximize Tax Benefits Q&A

Aired On

Jul / 24 / 2023
12:00 pm - EDT
Robert A. Green , Darren Neuschwander , Adam Manning
Green Trader Tax

Join host Robert A. Green, CPA of Panelists include Darren Neuschwander, CPA, and Adam Manning, CPA, Managing Members of Green, Neuschwander & Manning, LLC, a CPA firm focused on traders. 

We’ll spend about 15 minutes on the below content and 45 minutes on Q&A. 

Active traders who qualify for trader tax status (TTS) are entitled to significant tax benefits:

  • TTS traders can deduct from gross income business expenses of all stripes. 
  • They can elect mark-to-market accounting (Section 475 MTM) to avoid wash sale losses on securities and navigate around the $3,000 capital loss limitation – tax loss insurance. They can be eligible for a 20% deduction on qualified business income (QBI) if profitable. 
  • Traders can arrange health insurance and retirement plan deductions (employee benefits) using an S-Corp to pay officer compensation, which creates the necessary earned income component. 
  • In about 29 states, TTS pass-through entities can utilize the state and local tax (SALT) cap workaround solution to avoid the $10,000 cap on SALT itemized deductions. 
  • Investors can’t arrange any of the above tax breaks but enjoy long-term capital gains rates and lower 60/40 capital gains rates on futures (1256 contracts). 

About GreenTraderTax and Green, Neuschwander & Manning, LLC:

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This material is from Green Trader Tax and is being posted with its permission. The views expressed in this material are solely those of the author and/or Green Trader Tax and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Tax-Related Items (Circular 230 Notice)

The information in this material is provided for informational purposes only and does not constitute tax advice and cannot be used by the recipient or any other taxpayer to avoid penalties under any federal, state, local or other tax statutes or regulations, or to resolve any tax issue.

Disclosure: IBKR Tax Disclosure

Interactive Brokers does not provide tax advice, does not make representations regarding the particular tax consequences of any investments, and cannot assist clients with tax filings. Investors should consult with their tax professional about the tax implications of any investment.

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