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I don't pay any estimated taxes. I just pay the penalty for not paying estimated taxes.
I consider it a low cost loan from the government. It's only a 3% penalty that is calculated from the date each estimated payment is due. So actually it is less than 3%.
Since I make more than 3% profit it is worthwhile to me to not pay. Last year my penalty was only $59.
Besides it is almost impossible to know how much you will make in a year.
Several years ago I made the estimated payments. I then had a bad 4th quarter and got a lot of the estimated payment back. The IRS doesn't pay interest on that.
Thank you! That is so helpful and makes so much sense. I am just thankful that paying taxes on gains is even something I have to worry about. Both of my accounts are doing very well.
Regarding IB, yes I am aware of very high margin rates and I am in process of moving to other broker (not optionxpress). Once I trade there for few weeks and if everything is good then I would let you know about it. He is promising span margins and less than $2 RT but with some platform charge. I have to see how it works....
Buuuuuut....you're still paying capital gains aye?
I'm lost on why someone would want to pay taxes on a quarterly basis since the year is not 'over'. I don't know what I would do without the OX tax dump file.
My tax preparer fills out form 6781. That's for income from futures and options (sec 1256 Contracts). Those numbers go to Schedule D.
What is the OX tax dump file?
I'm guessing people pay quarterly so they don't have to pay the penalty for not making estimated payments. They don't want to give the gov any extra money.
I'd rather the gov give me a low interest loan that I can make even more money with so I can pay them even more money.
Roger that...the GainsKeeper in OX will export all of the years trades into the Schedule D for you. I do my own taxes with HR Block and it gives you the 'option' to import a trade history dump file and the HR Block tax program does it all for you. Very easy....
You don't need to keep track of each future and option trade for the IRS. Unless you are talking about stock trades.
You get the total profit or loss number for the year from the 1099 and report it on the 6781 form. Just one number that includes the value of the current open positions.
Have you been using the 6781 form for futures and options?