Hey fam,
If you’re making money trading, you gotta figure out how to keep more of it and not just hand it to the IRS. Here’s how I’m doing it: I have a Roth IRA just for day trading (my “spending” account), and a couple others I never touch. I also have SEP-IRA which i have to pay taxes on, but i max it out so i pay less tax now. The gold rule? Don’t touch the Roth till you’re 59½ and you pay ZERO taxes. That's the greatest thing ever to day traders.
Even my day trading gains are tax-free as long as they stay in the Roth. If you’re killing it in your cash or margin account, remember: you pay taxes every year on those gains. HATE that. So get yourself a Roth IRA. You can only put in $7k a year, but it adds up and then grows tax free.
**You can have multiple Roth IRAs (only if you’re really making money).
**You can move money between different Roth IRAs (like from Fidelity to WeBull).
That $7k a year limit is total, not per account.
Quick Example:
**A. Roth IRA**—starting balance 200k. ending balance 1.2mil. $1M yearly gains - Take Out $200k Early (All Profits):
Pay taxes on the $200k (about $33k) + 10% penalty ($20k) = ~$53k to IRS
**
B. Cash Account**—starting balance 200k, ending balance 1.2mil. $1M Short-Term Gains:
Pay taxes on $1M = ~$300k to IRS
Roth IRA is crazy good if you leave it alone till you’re old. Pulling profits early still has taxes and a penalty, but WAY less than trading big in a cash account and paying taxes every year. However, this only applies to profitable traders who does not take all the profits out. Remember only benefits for Roth is that growth INSIDE of roth is tax free. If you make 10k a month and take all 10k out then cash acct is better because you don't need to pay the penalty.
my early distribution example. gotta feed my fam. taxes on income and penalty sucks, but if i did it from cash/margin account, I would've paid alot more.
$331900 widthdrawn in 12months.
If you’re making money trading, you gotta figure out how to keep more of it and not just hand it to the IRS. Here’s how I’m doing it: I have a Roth IRA just for day trading (my “spending” account), and a couple others I never touch. I also have SEP-IRA which i have to pay taxes on, but i max it out so i pay less tax now. The gold rule? Don’t touch the Roth till you’re 59½ and you pay ZERO taxes. That's the greatest thing ever to day traders.
Even my day trading gains are tax-free as long as they stay in the Roth. If you’re killing it in your cash or margin account, remember: you pay taxes every year on those gains. HATE that. So get yourself a Roth IRA. You can only put in $7k a year, but it adds up and then grows tax free.
**You can have multiple Roth IRAs (only if you’re really making money).
**You can move money between different Roth IRAs (like from Fidelity to WeBull).
That $7k a year limit is total, not per account.
Quick Example:
**A. Roth IRA**—starting balance 200k. ending balance 1.2mil. $1M yearly gains - Take Out $200k Early (All Profits):
Pay taxes on the $200k (about $33k) + 10% penalty ($20k) = ~$53k to IRS
**
B. Cash Account**—starting balance 200k, ending balance 1.2mil. $1M Short-Term Gains:
Pay taxes on $1M = ~$300k to IRS
Roth IRA is crazy good if you leave it alone till you’re old. Pulling profits early still has taxes and a penalty, but WAY less than trading big in a cash account and paying taxes every year. However, this only applies to profitable traders who does not take all the profits out. Remember only benefits for Roth is that growth INSIDE of roth is tax free. If you make 10k a month and take all 10k out then cash acct is better because you don't need to pay the penalty.
my early distribution example. gotta feed my fam. taxes on income and penalty sucks, but if i did it from cash/margin account, I would've paid alot more.
$331900 widthdrawn in 12months.
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