LLC

Forum|Forum|2 years ago
October 25, 2023
2 replies
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Will opening an LLC reduce taxes as an Options trader versus just trading under a personal account? Also would it need to be foreign filed since the business is computed based?

Ask the Experts - Extension - Sept 2023

Anonymous_

Level 15

No, creating an LLC would not reduce your federal income tax liability as opposed to simply trading under a personal account and reporting on your individual income tax return (1040).

TimS5

Employee Tax Expert

High V90enterprises!

Your question is two-fold - First, can you save taxes doing your options trading through an LLC versus reporting it on your schedule C. If you are a single member LLC, the LLC is normally treated as a disregarded entity and reported on you Schedule C. If you are a multi-member LLC, depending on how the LLC was formed, it would be treated as a Corporation or a Partnership.

As a US Citizen, you are responsible for reporting your world-wide income on your Form 1040. This would apply whether or not you are based in he US or in a foreign country. If you are based and working in a foreign country, the income earned in that country would be subject to that countries rules and you maybe eligible for the foreign income exclusion or foreign income tax credit/deduction.

LLC Tax Filing Rules - TurboTax Tax Tips & Videos - Intuit will provide additional guidance in regarding your LLC.

v90enterprisesAuthor

Level 2

Thank you! For clarity with foreign file I meant if my LLC is formed in Nevada but I live in Florida and trading on my computer, would I need to file the separate foreign since i operate in a different state or does that not matter since my business is online?