Traders have unique tax needs requiring a specialist. Here are nine good reasons to engage our firm for your 2014 federal and state income tax return preparation. Tax compliance including preparation and planning is our core business and we have excellent long-term relationships with our valued clients.
- Large trading losses
Filing a tax return with large trading losses reported as ordinary losses causes IRS concern about paying large refunds. The IRS is accustomed to capital loss imitations. Forex traders with the default Section 988 treatment have ordinary losses. Active securities traders qualifying for trader tax status (TTS) and using a timely filed Section 475 election also generate business ordinary losses and net operating loss carryback refund claims. If you’re counting on a large refund or tax benefit from deducting ordinary trading losses, you should have our firm prepare and sign your tax return.
- Trader tax status and related tax benefits
The IRS doesn’t fully understand TTS and it’s important to file your tax return without red flags and include good written explanations in tax return footnotes. Many self-preparers and local accountants botch TTS reporting strategies, missing tax benefits and reporting items incorrectly. Taxpayers must properly elect Section 475 on time and perfect the election with a correctly filed Form 3115. The linchpin to trader tax benefits — business expenses, Section 475, and employee-benefit plans with entities — is qualification for TTS and our CPAs are highly trained in analyzing your qualification.
- Entities and retirement plans
Traders need to create compensation correctly to unlock and maximize employee-benefit plans including health insurance and retirement plans. Home office and other unreimbursed expenses need to be reported properly on individual returns in relation to entity income passed through on Schedule K-1. Pitfalls need to be avoided with C-Corps.
- Wash sales and Form 8949
Active securities traders generate many wash sale loss adjustments and brokers don’t report wash sales according to IRS rules for taxpayers. Taxpayers must make many changes on Form 8949 and they also must reconcile Form 1099Bs and explain differences in footnotes.
- Forex traders using lower 60/40 tax rates
We make a case for filing a capital gains election on spot forex to get lower Section 1256(g) 60/40 tax treatment. But those rules are vague and uncertain. If you’re reporting large forex trading gains with lower 60/40 tax rates, it’s wise to have our firm prepare and sign your tax return.
- Trading many different financial instruments
Tax treatment varies significantly among different types of financial instruments including securities, options, 1256 contracts, ETFs, indexes, forex, Nadex binary options, swaps, precious metals, bitcoin, and other financial products. It’s not always clear how a financial instrument is taxed and some brokers don’t get it right. Our CPAs look over your financial instruments to identify errors in tax treatment.
- Maximize expense deductions
Our CPAs are focused on maximizing deductions for investors, business traders, and investment managers. Where, how, and what expenses to deduct depend on your tax status. We handle thousands of traders and see every type of deduction possible — we won’t miss any for you.
- Obamacare net investment tax (NIT)
If you’re over the AGI thresholds for NIT — $250,000 married and $200,000 single — it’s important to reduce 3.8% NIT as much as possible. Many accountants don’t understand the nuances of NIT for traders. For example, unlike other taxpayers, Section 475 traders may offset trading losses against other bucket income getting a better result. Traders can also reduce NII by trading and investment expenses.
- Convenience and excellent service
Investor, trader, investment management, and small business tax compliance is complex and nuanced. Self-preparers will spend countless hours trying to get it right and they will probably get it wrong. Local CPAs, accountants and tax storefronts are known to botch tax return planning and preparation for investors, traders, and investment managers. We have endless stories of traders missing vital tax elections like the contemporaneous forex capital gains election or the Section 475 MTM election due by April 15, 2015. Our virtual service is very convenient and we maximize every legal tax benefit while avoiding tax trouble and pitfalls. We utilize best practices and technologies with our highly trained CPAs for excellent communication, work product, and client satisfaction. We have the best client testimonials and media and trading industry endorsements by far. Or tax preparation prices are very competitive and they represent a great value when you factor in tax savings and avoidance of tax trouble. Plus our fees are tax deductible, often as a business expense. We guarantee that you will be pleased with our service!
Tax return or extension due dates are coming up: March 15 for S-Corps and April 15 for individuals and partnerships. Visit our tax compliance section to get started.
We recommend our trade accounting service for active securities traders with wash sales.
We hope to hear from you soon. Don’t wait until the last minute, as we likely won’t be able to accommodate you then. Thanks for considering our services.
Robert A. Green, CPA
Darren L. Neuschwander, CPA
Managing Members of Green NFH LLC