One more thing to consider - make sure you understand the difference between wash sale rules and regular trading losses before you file those amended returns. If you sold a stock at a loss and then bought the same stock (or a substantially identical security) within 30 days before or after the sale, the IRS considers it a wash sale and you can't deduct the loss immediately. This is especially important for active traders who might buy and sell the same stocks multiple times. Robinhood's 1099 should identify wash sales, but it's worth understanding the rules so you don't make the same mistakes going forward. The wash sale rule is designed to prevent people from artificially creating tax losses while maintaining their investment position. Any disallowed losses get added to the cost basis of the replacement shares, so you don't lose the tax benefit permanently - it just gets deferred until you actually exit the position. Since you mentioned you've been actively trading the same types of stocks over multiple years, this could definitely impact your amended returns. Just another reason why working with a tax professional who understands these rules might be worth the investment.

I went through almost the exact same situation last year - started trading on Robinhood in 2020, made the same assumption about only paying taxes when withdrawing, and had to file amendments for three years. Here's what I learned that might help: First, don't panic about the penalties. The IRS has a "first-time penalty abatement" policy that can waive penalties if you've been compliant in previous years and this is your first major mistake. I got all my penalties waived just by calling and explaining the situation. Second, the process is actually more straightforward than it seems once you get your 1099s. Robinhood's tax documents are pretty comprehensive - they show all your transactions, wash sale adjustments, and separate short-term vs long-term gains clearly. The hardest part is just getting organized. One tip: when you download your 1099s, also grab your monthly statements for each year. Sometimes having the transaction details helps clarify things if there are any questions. And definitely consider using tax software that handles amendments - I used FreeTaxUSA and it walked me through the whole process. The good news is that depending on your trading results, you might actually get refunds for some years if you had net losses. I ended up owing money for two years but got a refund for the third year that partially offset what I owed. Start with getting those 1099s tonight like others suggested - once you see the actual numbers, the whole situation will feel much more manageable.

Quick question for the group - does anyone use any specific tax software that handles day trading well? I tried using TurboTax last year and it was a nightmare with all my trades!

This is such a common confusion for new traders! I went through the exact same thing when I started trading full-time. The key thing to understand is that your LLC structure doesn't change the fundamental tax treatment of trading profits - they're still considered capital gains, not business income subject to self-employment tax. However, I'd strongly recommend getting professional help to navigate this properly. As others mentioned, while your trading profits won't be subject to SE tax, you need to be careful about separating any other business activities (like if you start offering trading courses or signals). Also, make sure you're tracking all your trading-related expenses properly - home office, equipment, data feeds, etc. can all be deductible. One thing to keep in mind for next year: if you do qualify for TTS, you'll want to make that election by the filing deadline. It won't change the SE tax situation, but it will give you better expense deductions and allow you to deduct trading losses above the $3k capital loss limit. Definitely start making quarterly estimated payments based on your expected annual profits - the IRS doesn't care that you're not paying SE tax, they still want their income tax!

As someone who just went through this exact same confusion last month, I can confirm what everyone here is saying is correct! I was getting completely different numbers depending on which online calculator I used, and it was driving me crazy. What finally helped me was finding the actual IRS Publication 560 that someone mentioned earlier. There's a worksheet on page 18 that walks through the calculation step by step. It's basically: Schedule C net profit → subtract half of SE tax → multiply by roughly 20% (or more precisely, divide by 1.25 then multiply by 0.25). For my $75,000 Schedule C profit, I subtracted about $5,300 (half SE tax) to get $69,700, then calculated 20% of that for a max contribution of about $13,940. The key insight for me was realizing this isn't just some random tax rule - it's designed to put us self-employed folks on equal footing with employees who have employer 401k contributions. Once I understood the reasoning, the calculation made so much more sense. Thanks to everyone who shared their real numbers and experiences - it really helps to see concrete examples rather than just theoretical explanations!

This has been such a valuable thread to read through! I'm just starting my freelance journey and was completely overwhelmed by SEP IRA calculations. What I love most about this discussion is how everyone eventually arrived at the same answer through different paths - whether calling the IRS, using specialized tools, or consulting with plan administrators. The consistent formula everyone confirmed is: Schedule C net profit → subtract half of self-employment tax → calculate ~20% of that adjusted amount for your maximum SEP IRA contribution. But what really made it click for me was understanding the WHY behind subtracting half the SE tax. Learning that it's designed to make self-employed people equivalent to W-2 employees (who don't pay the employer portion of payroll taxes) totally changed my perspective. It's not just an arbitrary rule - there's real logic behind it. I'm bookmarking this entire thread as my SEP IRA reference guide. Thanks to everyone who shared their real numbers and experiences - seeing actual examples like the $85,000 Schedule C profit examples really helps visualize how this works in practice. As a newcomer, these kinds of detailed discussions with multiple confirmations give me the confidence I need to handle my own retirement contributions correctly!

This has been such an educational thread! I'm new to collecting but have been building a vintage watch collection over the past few years. Reading through all these responses has really opened my eyes to the tax implications I hadn't fully considered. One question that comes to mind - for those of us who are active collectors (buying and selling regularly rather than just holding long-term), is there a point where the IRS might consider this a business activity rather than investment/hobby activity? I've been flipping some watches to fund purchases of higher-end pieces, and I'm wondering if that changes the tax treatment from the collectibles capital gains rules we've been discussing to regular business income. Also, @Emily Parker mentioned that short-term capital gains (less than a year) don't get the 28% cap protection - they're taxed as ordinary income at your full marginal rate. For someone in a higher tax bracket, that could mean paying 32% or even 37% on short-term collectible gains, which is significantly higher than the 28% cap on long-term gains. That's a really important distinction for timing sales! Thanks to everyone who mentioned the various tools and resources - I'm definitely going to look into some of the tax calculation tools and record-keeping strategies mentioned here before I make any major sales decisions.

As someone who's been collecting vintage guitars for over a decade, I wanted to add a perspective on the record-keeping challenges that several people have mentioned. The documentation issue becomes even more complex when you factor in restoration and maintenance costs over many years of ownership. For instruments (and I imagine this applies to other collectibles too), you can potentially add certain improvement costs to your basis - things like professional restoration, new cases, humidity control systems, or even storage facility costs. But you need to distinguish between "improvements" that add value versus regular "maintenance" that just preserves existing value. I learned this the hard way when I sold a 1965 Fender Stratocaster. I had receipts for about $3,000 in professional restoration work over 8 years of ownership, but my accountant told me that some of those costs (like basic setup and cleaning) were maintenance, while others (like refinishing and electronics upgrades) could be added to basis. The distinction saved me several hundred dollars in taxes. Also want to echo what others have said about the business vs. hobby determination - it's really important to be mindful of this if you're actively trading. I deliberately limit myself to selling no more than 2-3 guitars per year to stay clearly in "investment" territory rather than risk being classified as a dealer. The 28% cap has definitely influenced my selling strategy. I try to time major sales for years when my regular income puts me in lower brackets, since every dollar of regular income affects how much of the collectible gain gets taxed at the full 28%.

18 Has anyone tried bunching their donations? My tax guy suggested I donate 2 years worth in one year so I could itemize, then take the standard deduction the next year. Seems like a hassle but might be worth it if you're donating substantial amounts.

14 Another strategy worth considering is using a Donor Advised Fund (DAF) if you're planning to donate regularly over several years. You can contribute a larger lump sum in a year when you itemize (getting the full tax deduction), then distribute grants to your favorite charities over multiple years from the fund. For example, if you normally donate $1,300 annually, you could contribute $2,600-$3,900 to a DAF in one year, itemize that year, then make your charitable grants from the fund over the next 2-3 years while taking the standard deduction. Fidelity, Schwab, and Vanguard all offer DAFs with relatively low minimums ($5,000 or less). This gives you more flexibility than the bunching strategy since you're not locked into a rigid every-other-year pattern.