Retired or self employed

Forum|Forum|5 years ago
May 13, 2021
1 reply
9 views

I started taking distributions from my IRA rollover beginning 2017. I continued (maybe wrongly) to declare my occupation as Commodity Trader. Any net income from trading I paid self employment tax. Should I amend past returns to retired and not take the self employment tax election? What about 2020 return, as it is not yet filed?

ToddL99

Level 13

Your stated "Occupation" on the tax return has no effect on how your tax is calculated.

If you are a legitimate day-trader and are reporting stock gains/losses on Schedule C, then any net income from those trades is subject to self-employment tax.

If not a day-trader, then your stock gains/losses are reported in the Investment Income section of TurboTax Premier or higher version.

mry7Author

Level 2

I'm not a full time trader anymore. It's part time now, however I've been trading futures for almost 40 years.

ToddL99

Level 13

If you choose to report your stack gains/losses as a day-trader (i.e. Schedule C, allowing you to deduct various expenses), it doesn't make any difference whether you are doing full-time or part-time.

"Day-trader" status is your choice - you don't have to subject yourself to self-employment tax.

If you want to report your stock gains and losses on Form 8949 and Schedule D, you can do that for 2020 (Investment Income interview). You can amend prior-year returns, but may find it difficult to recover any prior-year self employment taxes - that money goes to the Social Security Administration, not the IRS.