Late and Prior-Year Returns
File late tax returns before the IRS catches up with you and insists on penalties.
Many traders have not filed last year’s tax returns for various reasons. If you’re in this boat, don’t worry — we can help. Contact our firm as soon as possible and save yourself from headaches and larger penalties down the road. We can prepare your tax return reasonably quickly if you provide all the tax information.
Late entity tax returns are subject to late filing penalties in all cases. See the IRS Information About Your Notice, Penalty, and Interest and scroll to p. 2, No. 32. Late submission may be tolerable in some cases — contact us for details. Late individual tax returns are subject to penalties, plus interest charged on the balance of tax owed with the tax return filing. Non-balance due tax returns will incur a small penalty for filing more than 60 days late.
Why bother filing if I have significant trading losses?
It’s only a matter of time before the IRS sends you a tax notice. Also, the IRS won’t necessarily know you have trading losses and may send a tax bill for trading gains based on your stock proceeds and cost-basis reporting from the broker. Plus it will add penalties and interest. Don’t be shocked if your tax bill is several thousand dollars. Remember, the IRS is sent all Form 1099s from your brokers.
Some clients figure they don’t have to file a tax return since they are under the gross income threshold required. While that could be true, they may have substantial proceeds on securities requiring a tax filing. All losses should be reported in order to receive the related tax benefits later on; otherwise, those benefits are wasted forever.
Contact us for assistance
We can calculate your trading gains, losses, and business expenses. We can review your trading activity and your qualification for trader tax status. We can file your return as a business for many additional tax advantages. We may be able to reduce your tax bill considerably. We also can work out a payment plan with the IRS and seek the abatement of penalties.
Important notice for late Section 475 MTM elections
You should file your tax return with your Form 3115 (Change of Accounting Method) by the tax filing deadline of Sept. 15 (entities) or Oct. 15 (individuals). If you file your Form 3115 late, you stand to lose Section 475 MTM status, which can have significant negative consequences on your tax return. If you elected MTM before the recent tax year, this notice does not apply to you.
Thank you for placing your trust in us,
Robert A. Green, CPA and Darren L. Neuschwander, CPA