Anthony Speciale Stock Market Analyst

Better Way to

WEALTH
MORE MONEY, MORE QUICKLY, MORE SAFELY.

One of the Biggest Perks of Futures Trading

Once you’ve made a few bucks, you’ll find the greatest expense you’ll have to overcome in your life is your tax obligations.

Once you’ve made a few bucks and you have a few assets under your belt, you’ll find the greatest expense you’ll have to overcome in your life is your tax obligations.

After all, your right to earn an income comes with an expense.

We may not like what our tax dollars are squandered on, but that’s something you have to contend with in the voting booth.

The reality is that “we the people” are income-producers for the government.

They tax us when we make money. They tax us when we spend money. They tax us when we transfer money.

Anytime and every time money or assets are transferred, taxes are collected.

So, what can we do to limit our tax exposure? A lot!

But before I go on, I want to let you know that I am not a tax professional.

I strongly recommend speaking with your accountant or licensed tax professional to discuss any and all tax matters and what works best for your personal financial situation.

With that said, there are lots of ways to legally reduce our tax liability. Investing in real estate that’s able to be depreciated is one of them.

Holding our primary residence long enough between moving so as not to endure capital gains related tax burdens is another.

Holding our investment positions long enough for the profits to be considered capital gains as opposed to ordinary income is yet another.

The 60/40 Rule

But one of my preferred ways to limit tax exposure is to trade futures!

That’s because futures are taxed using the “60/40 rule.”

This means that 60% of your net gains from futures trading are taxed at the long-term capital gains tax rate of 15%. And only 40% of your net gains are taxed at the ordinary income tax rate.

Let me break it down… Let’s say I made $100,000 in net trading gains this past year. The first $60,000 will be taxed as long-term capital gains, and the remaining $40,000 will be taxed as ordinary income.

The long-term capital gains tax rate is a fixed tax rate determined by the government. This is what we’re taxed after we’ve held an asset for a given period of time and then sell it for a profit.

This is also the tax structure for 60% of your futures trading income.

Our ordinary income tax rate is based on our income bracket, which is adjusted according to your entire income, less your deductions, and determines your effective tax rate.

This is the tax structure for the remaining 40% of your futures trading income.

Final Thoughts

If I’m going to take the risk associated with trading, I’ve chosen to give myself the greatest opportunity to retain as much of my profit as possible.

For me, this was a huge deciding factor in which asset I was going to focus on when I first started trading.

Once again, I strongly recommend speaking with your accountant or licensed tax professional to discuss what works best for your personal financial situation.

You may look back and realize you were able to save a bundle of money on taxes.

Rules to Live By

Peace begins with a smile.
Mother Teresa

Until next time, I wish you a beautiful and blessed day!

Yours In Trading Success,

Anthony Speciale Jr.

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