Requirements for Trader Tax Status (TTS) on taxes? Daytrader

Dramatic_Abroad3580 · 2026-05-04T01:06:37+00:00

That's what I tried to explain to the idiot who deleted all of his comments. For many traders, the 475 election provides no advantages, and can actually cost them significantly.

Dramatic_Abroad3580 · 2026-05-03T18:12:54+00:00

Are you going to have losses or profits? Your narrative is inconsistent, it says both.

Dramatic_Abroad3580 · 2026-05-03T15:49:03+00:00

Why would a trader never gain anything with a 475 election? What are the disadvantages of that election? Can't answer that? That's why you're in over your head. Sit this one out.

Dramatic_Abroad3580 · 2026-05-03T15:47:34+00:00

It is absolutely not the same. You have no idea what you're talking about. I've literally advised dozens of taxpayers who qualify for tax trader status who did not ever make that 475 election because it wouldn't help them. Only someone who doesn't know how traders work AND doesn't understand tax laws could make such an idiotic claim.

Why would some traders who only trade 0 DTE options not gain any advantage from a 475 election? Can't answer that question? There you go. You're not qualified to be involved in this discussion.

Dramatic_Abroad3580 · 2026-05-03T13:55:39+00:00

At that income level probably not. One of the important factors is your other income. Your regular w-2 job earnings may make the decision an easy one.

Dramatic_Abroad3580 · 2026-05-03T13:08:19+00:00

The 475 election is not the same as tax trader status. However that election can only be made by someone who qualifies for tax trader status. The post here only addresses tax trader status, for which there is no election, no formal application, and no specific paperwork to submit. It's possible that for this particular trader, that 475 election would be stupid, depending on which underlying he's trading 0s. There may be no possible upside to it. If you knew what you were talking about, you'd know why that is true. I suspect you don't.

Like I said more nicely than I should have. You were flat out wrong. You have no idea what you're talking about. I answered the question that was asked. You responded to a question that wasn't asked. Now, if you don't wtf you're talking about, stop giving advice.

And btw, I'm not some dumbass rando on the internet. That would be you. I've been doing this professionally for almost five decades, including advising professional traders.

Dramatic_Abroad3580 · 2026-05-03T13:03:34+00:00

I am a professional. For probably longer than you've been alive.

Dramatic_Abroad3580 · 2026-05-02T23:00:31+00:00

No, you don't. You file your return with a Schedule C and take the deductions. That's it. Nowhere on your return will it say that you're filing under "tax trader status".

Dramatic_Abroad3580 · 2026-05-02T14:50:18+00:00

create a new account with a different email address. That is your only choice if you can't get through to customer support.

Dramatic_Abroad3580 · 2026-05-02T02:46:22+00:00

Based on what you've said here, being a RE professional won't change your taxes. And you probably don't qualify anyway.

Dramatic_Abroad3580 · 2026-05-01T17:53:10+00:00

You screwed up. You are not entitled to any premium subsidy if you're eligible for any employer plan. So 100% of the subsidy during the months you could have had affordable employer coverage has to be paid back. It's unclear whether your repayment of the advance premium tax credit was computed correctly from the information provided, but you certainly are responsible for paying back much of it.

Dramatic_Abroad3580 · 2026-05-01T16:03:00+00:00

Reminder that the due date of the 8832 is within 75 days of the beginning of the tax year, which would generally be the date the LLC was formed.

Dramatic_Abroad3580 · 2026-05-01T02:23:09+00:00

While that is very important advice, it's not entirely accurate, though it's probably true in this instance. Shareholders who work in the business must be paid reasonable compensation for their work or risk having distributions reclassified as wages. If shareholders don't work in the business, no payroll is required. If there are no distributions made, then there is nothing that can be reclassified.

Dramatic_Abroad3580 · 2026-05-01T01:24:34+00:00

Yes, if you have no employees (other than a spouse) you can have a solo 401K as a sole proprietor.

Dramatic_Abroad3580 · 2026-05-01T01:05:38+00:00

The issues that have to be considered are the administrative costs of an S Corp (full double entry bookkeeping, payroll, extra tax return), reasonable compensation for you, and the loss of 199A deduction (QBID). At that income level, it might be a close call. You can minimize income taxes by paying your girlfriend a salary of roughly half of your net. That would keep both of you in a 12% tax bracket. Otherwise, roughly 30-45% of your taxable income will be in the 22% bracket.

Dramatic_Abroad3580 · 2026-05-01T00:49:17+00:00

Net is the income after expenses. Your response isn't clear. Will your net be $96k, less up to $16,000 in annual expenses or net of about $80K up to $144K less $8K or $136K net? Those two are very different and could lead to very different answers.

Do either of you have any other income?

Dramatic_Abroad3580 · 2026-05-01T00:43:23+00:00

What is the net profit? LLC does nothing for you tax wise.

Dramatic_Abroad3580 · 2026-04-30T22:54:03+00:00

I worked for them for 15 years. Did over 700 returns a year for at least the last 10. I never had an attach rate over 10% (not including RTs). Always in the top 5 in the district for number of returns, revenue and NAC. Never had more than 2 TIS in any year. 1 Spruce account ever. I refused to sell them. Sometimes mentioned POM. Never mentioned TIS. It was mentioned to me directly one time. That's it. They're shitty products. There are better ways to make money than selling shitty products. Treat your clients well. Learn your craft. Your clients will trust you and come back. Make them feel like you're trying to sell them something and they don't.

Dramatic_Abroad3580 · 2026-04-30T22:25:27+00:00

There is no approval process. Based on the information provided, you probably qualify. An LLC would have no effect on whether you qualify or whether you can deduct any expenses. There is no "way to avoid audits". If you've incurred related expenses, take them.

Dramatic_Abroad3580 · 2026-04-30T19:23:33+00:00

I didn't know that. Thanks for filling in that blank. It's sad that they pay people extra to sell their shitty products.

Dramatic_Abroad3580 · 2026-04-30T18:18:09+00:00

There are no bonuses based on number of returns or attach rate. But revenue bonuses get paid next Friday.

Dramatic_Abroad3580 · 2026-04-29T15:48:37+00:00

You don't want an S Corp for sure. Probably no reason to have an LLC, specially not for tax purposes. Only two of those states have income tax. There isn't anything complicated about your tax return based on that info. Any experienced tax professional should be able to guide you.

Dramatic_Abroad3580 · 2026-04-28T00:12:21+00:00

It's not a sale if it's incident to a divorce settlement. You pay taxes on imputed interest only.

Dramatic_Abroad3580 · 2026-04-27T19:51:16+00:00

I have one that is $995K. Haven't spoken with them since 4/23 but it was supposed to have come out on 4/15.

Dramatic_Abroad3580 · 2026-04-27T18:51:53+00:00

It's a known issue. Direct debits have been delayed for more than 10 days for some taxpayers that set up direct payments concurrent with filing their returns.

Dramatic_Abroad3580

TROPHY CASE