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I asked them about taxes; TST treats you as a contractor. They will send you a 1099 form at the end of the year. I would imagine tax rates could be different depending on your situation. Check with your tax adviser.
Does this mean you are an employee of them, on a contract, and you receive a 'paycheck'?
For taxes, I would imagine they would want their share of the split before tax, but want you to pay the total taxes, including for their share as well.
I think they are pretty flexible and will even hire your company if you have one. You can worry about that after you pass the combine though.... first things first!
Basically as a contractor you are self employed. You are doing work for another company and are not considered a employee of the company you are working for.
This is on the website: You do not get a paycheck. Instead you can withdraw money from your account after you make a specific amount over your starting balance. I think its 5 or 10 thousand if with a 50,000 account. So, anything over 60,000 thousand you can withdraw.
Doing this from memory, but I believe with a 1099 they do not take out any taxes at all.
When I was a contractor I put 40% of the money I received from the company I was working for into a savings account for tax purposes. Trust me you will need it!
With a TST account I would put forty dollars out of every hundred I withdrew into savings account. If you dont do this you will get killed at the end of the year on taxes.
Disclaimer: The above is based on my own experience. Your situation may be different; PLEASE CHECK WITH A TAX ADVISER!
Regarding the "buffer", I also believe that at any point when you exit the Combine, you will receive a check for any surplus. So the buffer exists only while you are in the combine to protect against ongoing losses while you are actively trading.
That was my understanding anyway, you should check with them.
I thought we could use a thread devoted to Taxes. This is all things taxes regarding trading.
One example, Advantages/disadvantages for different situations (equities, futures, forex, etc) as well as benefits of filing sole-proprietor vs LLC or as a …
A good interview from "OBX Trader", the latest funded trader at TST. I like this guy, he talks about PASR trading, and says that he really enjoys psychology books and Dr. Brett Steenbarger.