"How do I file prop firm income?"
Prop firm payouts typically arrive on a 1099-NEC and are treated as self-employment income on Schedule C — which means SE tax, but also business deductions like eval fees, data feeds, and platform costs. The IRS publishes the current SE-tax rate and wage base on its
Self-Employment Tax page. We structure it so you only pay tax on what you keep.
"Do I qualify for mark-to-market?"
MTM (IRC §475) is one of the most powerful elections for active traders — full ordinary-loss treatment and no wash-sale rule. We assess your frequency, intent, and P&L history to determine eligibility and file the election.
"How do I reduce taxes on trading profits?"
Through entity structure, MTM elections, Section 1256 rules, business expense deductions, and strategic loss harvesting — the right mix depends on your situation, and that's exactly what we model.
"Should I open an LLC or S-Corp for trading?"
It depends on your income, structure, and goals — an S-Corp typically starts making sense above roughly $80K in net self-employment income. Try the
S-Corp savings calculator, then we handle the full analysis and formation.
"I lost money — do I even need a CPA?"
Often more than a profitable trader. Filing losses correctly sets up carryforwards, can offset W-2 income, and protects your future profitable years.
"The IRS sent me a notice about my trades."
Don't panic. We handle IRS notices, audits, and correspondence for trader clients — most trade-reporting notices come from mismatched 1099s and are resolvable once filed correctly.
What does TraderTax do?
TraderTax specializes in tax preparation and planning for active traders — prop firm traders, futures traders, options traders, and crypto traders. We connect traders with licensed CPAs who understand prop firm 1099-NEC payouts, Section 475(f) elections, Section 1256 contracts, and the wash-sale rule under IRS Pub 550.
How much does TraderTax cost?
Tax filing starts at $597/year (File It) for trader return prep with TTS analysis and wash-sale review. Most profitable traders choose Optimize It at $1,197/year, which adds a strategy call and a full deduction review. Full entity strategy and MTM election filing is $2,497/year (Strategize It). A federal extension is $97. Full breakdown on the
pricing page.
What is Trader Tax Status (TTS)?
Trader Tax Status is an IRS designation for traders whose activity rises to the level of a business. It typically lets active traders deduct trading-related business expenses (home office, education, equipment, software, data feeds) on Schedule C, and it opens the door to the §475(f) mark-to-market election, which converts capital gains and losses to ordinary income and sidesteps the $3,000 capital loss limit. Qualification turns on substantial, frequent, and continuous trading activity, and every situation varies.
How are Section 1256 contracts taxed?
Section 1256 contracts (futures, broad-based index options like SPX/NDX/RUT, and certain forex) get 60/40 treatment: 60% long-term capital gains, 40% short-term, regardless of holding period. They're reported on Form 6781 rather than Form 8949 and are marked to market at year-end automatically. For most futures traders this is one of the more favorable treatments in the tax code.
What is the wash-sale rule for traders?
Under IRS Pub 550, if you sell a security at a loss and buy a substantially identical security within 30 days before or after, the loss is disallowed and added to the basis of the replacement shares. Wash sales generally don't apply to Section 1256 contracts (futures, broad-based index options) or, per current IRS guidance, to crypto. Traders who have made the MTM election are typically exempt as well.
Do you handle offshore brokerages and FBAR?
Yes. Traders with offshore prop firms (Bybit, Binance, Weex) or foreign brokerage accounts typically need to file FinCEN Form 114 (FBAR) if aggregate balances exceed $10,000 at any point in the year, plus Form 8938 (FATCA) at higher thresholds. Penalties for non-disclosure can exceed $10,000 per account. Offshore situations are handled exclusively through our Strategize It tier.
What is the Tax Snapshot tool?
The Tax Snapshot is a free 10-question assessment. Answer a few questions about your trading and you get a personalized summary of your tax exposure, the deductions traders in your situation typically miss, and the service tier that usually fits best — then you can get matched with a CPA in our partner network.
