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I really am intrigued trying the new Trader Career Path with Earn2Trade. But since I am from Austria it seems to be a bit difficult to get the ITIN US tax number that is mentioned by Earn2Trade on their FAQs. Even my tax advisor says the chances are slim to zero to get such a number assigned.
When asking Helios Support I get mixed information. Some say that you can use a W8-BEN instead (which my tax advisor also suggested), some from Helios say the ITIN is mandatory.
Does anybody have some correct information regarding that tax situation for prop traders from outside the US?
What do you mean by "This sort of income is not normally subject to SE tax." So, for instance, if a trader were to profit $100,000 as a partner of E2T... would the process look like this:
1) 80/20 split: $80,000 for trader, $20,000 for firm.
(Basing Everything off Single for simplification purposes) Assuming the total taxable rate is 15% and the trader made between $41k and $459k, 60% or $48,000 would be taxed at a long term capital rate of 15% so they'd keep $40,800 while paying $7,200. (But if they were married filing jointly they'd keep the full amount, yes?)
The short term capital gains according to the Investopedia 2022 taxes would then be taxed at what, 12%(10k-41k) or 22%(41k-89k)? It would probably go off the 40% of the total gains right, so that is $32,000 that would be taxed at 12%, is that correct? So after the short term capital gains tax the 40% would now be $28,160.
3) Total Gains after the 60/40 capital gains for $80,000 would be $68,960, meaning the total tax would be $11,040 assuming the filer is single ( it looks like married filing jointly would have much more tax benefits, is that right?)
So, in this theoretical example, would this be about right?
4) Why would someone be subject to SE tax if they are a partner with your firm filing a K1? And if they were, would the SE tax be taken out before the 60/40 capital gains tax?
I appreciate any information you or anyone with experience in this department may have. I know I'd need to consult with a CPA for a more precise estimation. I was looking into turbo tax and looks like they have competent CPA's for a flat fee of $389 a year, being able to consult with the CPA's also and have them file your taxes. Has anyone ever used them for futures related business?
Although we appreciate your detailed questions and would love to help you with an answer, these are very technical and specific inquiries and would be preferable if a CPA or an American trader with experience on the matter could respond.
Regardless, we hope you find an answer quickly and an excellent rest of the year.
Earn2Trade www.earn2trade.com Become a Professional Trader. Decisions That Can Change Your Life Forever.
I have a question about the $550 Daily Loss Limit. Will any of the following cause the account to fail?
Scenario A
Day Start = $25000
Trade 1: +$750. (P&L = $25750)
Trade 2: -$600. (P&L = $25150)
Day End = $25150
Scenario B
Day Start = $25000
Trade 1: +$750. (P&L = $25750)
Trade 2: -$300. (P&L = $25450)
Trade 3: -$300. (P&L = $25150)
Day End = $25150
Scenario C
Day Start = $25000
Trade 1: +$750. (P&L = $25750)
Trade 2: +$100. (P&L = $25850). Trade 2 moves against me $600 before closing in profit. Total P&L is always positive on the day.
Day End = $25850
Scenario D
Day Start = $25000
Trade 1: +$750. (P&L = $25750). Trade never has any loss, but it experiences an in-profit pull-back of $600 (goes to +$700, pulls back to +$100, then closes at +$750).
Day End = $25750
That is what I think a Daily Loss Limit means. It is how Rithmic define "Loss Limit" in their risk parameters; setting "Loss Limit" to $500 would only liquidate at $24500.
However, Earn2Trade's website states: A daily loss limit is the maximum amount an investor can lose on their total asset amount or a specific trade per day.