Question 1

Do you handle prop firm 1099-NEC and funded account payouts?

Accepted Answer

Yes! Prop firm and funded account tax preparation is our primary focus. We handle 1099-NEC, 1099-MISC, and 1099-K reporting from all major prop firms including Apex, Topstep, FundingTicks, FTMO, and more. We properly report payouts on Schedule C and help optimize your self-employment tax.

Question 2

Who qualifies for Trader Tax Status (TTS) as an active trader?

Accepted Answer

Trader Tax Status is available to individuals who trade frequently enough to be considered in the business of trading. Generally, this means executing trades on most trading days, spending significant time on trading activities, and seeking to profit from short-term market movements rather than long-term investments.

Question 3

What is the Mark-to-Market (MTM) election?

Accepted Answer

The Mark-to-Market election under IRC Section 475(f) allows qualified traders to treat gains and losses as ordinary income/loss rather than capital gains/losses. This eliminates the $3,000 capital loss limitation and wash sale rules for securities.

Question 4

Do you work with futures, forex, stocks, and crypto traders?

Accepted Answer

Absolutely. While prop firm traders are our primary focus, we also specialize in futures (Section 1256), forex (Section 988), stocks, options, and cryptocurrency traders. We handle the full complexity of multi-instrument, multi-broker tax reporting.

Question 5

What entity structure is best for prop firm traders?

Accepted Answer

The optimal structure depends on your income level and situation. Since prop firm income is self-employment income, an S-Corp can provide significant self-employment tax savings once you reach $50K+ in annual prop firm payouts. We'll help you determine the best structure based on your trading activity and goals.

Question 6

Can I deduct my prop firm evaluation and reset fees?

Accepted Answer

Yes! Evaluation fees, monthly subscriptions, reset fees, trading software, data feeds, and other trading-related expenses are deductible as business expenses on Schedule C. These deductions can significantly reduce your tax liability.

Question 7

What is the deadline to make the MTM election?

Accepted Answer

The MTM election must be filed by the due date of your prior year's tax return (typically April 15th) to be effective for the current tax year. This is a critical deadline that cannot be extended, so planning ahead is essential.

Question 8

How can I reduce my self-employment tax on prop firm income?

Accepted Answer

Strategies include forming an S-Corp to pay yourself a reasonable salary (reducing SE tax on remaining profits), maximizing deductible expenses, and contributing to a SEP-IRA or Solo 401(k). We'll analyze your situation to recommend the best approach.

Question 9

What documents do I need to provide?

Accepted Answer

You'll need your 1099 forms (1099-NEC from prop firms, 1099-B from brokers), trading records, prior year tax returns, and documentation for any deductions. We'll provide a complete checklist and secure portal to upload your documents.

Question 10

How long does the tax preparation process take?

Accepted Answer

Typical turnaround time is 2-3 weeks after receiving all documents. For complex returns with multiple prop firms and brokers, it may take slightly longer. Rush processing is available during tax season for an additional fee.

Question 11

Do you handle state tax returns?

Accepted Answer

Yes, we prepare state tax returns for all 50 states. Multi-state traders with nexus in multiple jurisdictions can rely on us to handle the complexity of state tax obligations.

Question 12

Can you help if the IRS questions my return?

Accepted Answer

Yes. We provide IRS inquiry support and can help you respond to notices. Our returns are prepared with audit-ready documentation, so you'll have clear explanations for every position. For formal representation, we can refer you to a qualified tax attorney or EA.

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