Tax Planning/taxes

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Question
I day trade and I won a cash prize from my broker for being so successful (contest). I expect to win more cash prizes and to earn over 200k this year day trading. I am also an employee at a grocery store. All my expenses (including mortgage) is under 4k per year so I cannot do the itemized taxes. What can I do to reduce how much taxes I pay in day trading? I am married filing jointly. Also, If my account balance increases but I do not withdraw money is that considered income?

Answer
Alvaro - From your question and the background that you give, you appear to be in the "business" of day trading.  In that case, you will be likely be paying self-employment taxes and your trading will be considered on a "mark-to-market" election basis.

Below are some links that may assist you in understanding the complexity of the issues you are facing.  There are strategies for reducing the taxes you will pay as you can organize your business in any manner you deem necessary to protect your interests.

http://www.forbes.com/sites/anthonynitti/2013/08/29/the-tax-aspects-of-day-tradi
http://www.marketwatch.com/story/tax-strategies-for-day-traders-2015-02-25
http://www.investopedia.com/articles/trading/09/incorporate-active-trading.asp?h
http://www.dummies.com/how-to/content/day-trading-expenses-you-can-deduct-from-y

I hope this information helps you understand the issues of your endeavors.  

Tax Planning

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OWEN S. ARNOFF, EA

Expertise

As an Enrolled Agent, I am fully capable of providing tax advice as it relates to personal and business income taxes. Enrolled Agents are the only Federally licensed tax practitioners and are admitted to practice before all administrative functions of the IRS. My specialty is working with small business owners who file Schedule "C" and helping them to structure their business in such a way as to maximize as many tax advantages as possible. I also enjoy working with individuals who have both routine as well as complex tax situations. I prefer to concentrate on individuals and small business tax planning.

Experience

I have a 25 year background in financial services including tax, bookkeeping, insurance, real estate and securities. I was previously the Chief Financial Officer of a local and national franchise organization. I am currently semi-retired, but used to own (in partnership with another EA) an individual and small business financial engineering firm where I work with nearly 2,500 individuals and small business owners in nearly every state and almost every continent, assisting them in all aspects of their tax and financial well-being. I have prepared or reviewed more than 8,000 tax returns in my career.

Organizations
National Association of Tax Professionals

Publications
http://www.amazon.com/Owen-Arnoff/e/B00BLRIZNU/ref=ntt_dp_epwbk_2

Education/Credentials
Enrolled Agent, Admitted to Practice Before the IRS, Accredited Tax Preparer, Fellow of National Tax Practice Institute, Certified QuickBooks ProAdvisor (1999-2011), Sleeter Group Certified QuickBooks Consultant, Life & Disability Insurance Agent License (California, Texas, Maine), Real Estate Agent License (California); Many years of continuing education in all these fields.

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