Saving on taxes when trading stocks

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tom1a
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Joined: Thu Mar 26, 2020 3:50 am

Saving on taxes when trading stocks

Post by tom1a » Thu Mar 26, 2020 5:08 am

Hi, I 40 yrs old. I would need help with minimizing taxes when trading and investing.

I am currently not working but I have savings and stocks.
I do not have any retirement account.

I don't need any money right now from my saving accounts.

I would like to invest all of my remaining savings into stock market for long term growth but I also buy and sell frequently with certain part of my portfolio. I don't take the money out from my brokerage account , just sometimes wait for a better opportunity and sell/buy again . But this causes me to pay high taxes .

Is there any type of retirement account where I could put my savings and possibly transfer my existing stocks , where I could trade frequently without paying any income tax and capital gain tax when buying and selling stocks and then I would pay one time income tax when i need to withdraw it.

Thank you .

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David Jay
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Re: Saving on taxes when trading stocks

Post by David Jay » Thu Mar 26, 2020 7:59 am

Tom:

Welcome to the forum! Everyone is welcome here, but be aware that the advice you will get here is dominated by Boglehead Philosophy, link: https://www.bogleheads.org/wiki/Boglehe ... philosophy

Any personal tax-advantaged account will allow you trade without tax implications. Unfortunately, there is no personal account that will allow you to dump an unlimited amount of money into the account, they are all intended for retirement accumulation and have annual limits. [edit] All of these account require work income, so if you have not had work income from a W-2 or Schedule C you may not be eligible to contribute.

An IRA (Roth or traditional) is limited to $6000 per year, $7000 if over age 50. You can still make a contribution for 2019 until April 15 so you could get $12,000 (2019+2020) into an IRA immediately. There are income limits that affect deductibility so we can’t say if you will receive a deduction for making a contribution without knowing your income.

For self employed, there are two options that allow larger annual contributions - Solo 401K and SEP IRA. Lots of information on the WIKI.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Topic Author
tom1a
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Joined: Thu Mar 26, 2020 3:50 am

Re: Saving on taxes when trading stocks

Post by tom1a » Thu Mar 26, 2020 8:25 am

Thank you ,,

All of my income is from work as a self employed contractor.
I don't even know why , but I never had a retirement account.
I just paid my income tax and then I put any money left into my brokerage account or saving account.

Could I put my savings into solo 401k or SAP for the past yrs if I have never ever contributed ?
My net income for the past 10y or so was around 80K a yrs.

thank you .

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LadyGeek
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Re: Saving on taxes when trading stocks

Post by LadyGeek » Thu Mar 26, 2020 9:46 am

Welcome! A moderator has moved your question into the non-US forum. Based on your questions, are you a US citizen working in the US? If so, I'll put your thread back into the personal investments forum (for US investors).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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tom1a
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Joined: Thu Mar 26, 2020 3:50 am

Re: Saving on taxes when trading stocks

Post by tom1a » Thu Mar 26, 2020 11:10 am

I am a us citizen working in the usa .
thank you

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LadyGeek
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Re: Saving on taxes when trading stocks

Post by LadyGeek » Thu Mar 26, 2020 11:36 am

Thanks! This thread is back in the Personal Investments forum (portfolio help).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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David Jay
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Re: Saving on taxes when trading stocks

Post by David Jay » Thu Mar 26, 2020 12:04 pm

tom1a wrote:
Thu Mar 26, 2020 8:25 am
Thank you ,,

All of my income is from work as a self employed contractor.
I don't even know why , but I never had a retirement account.
I just paid my income tax and then I put any money left into my brokerage account or saving account.

Could I put my savings into solo 401k or SAP for the past yrs if I have never ever contributed ?
My net income for the past 10y or so was around 80K a yrs.

thank you .
This looks like a pretty good resource: https://www.investopedia.com/ask/answer ... ns-due.asp

As I read it:
- 20% of Schedule C net income, up to $56,000.
- can contribute for 2019 until April 15
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Topic Author
tom1a
Posts: 5
Joined: Thu Mar 26, 2020 3:50 am

Re: Saving on taxes when trading stocks

Post by tom1a » Fri Mar 27, 2020 1:08 am

Thank you , I'll check it out.

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