How to Fill Out Tax Forms for TakeProfitTrader

TakeProfitTrader withdrawals are reported as self-employment income on Form 1099-NEC (not 1099-MISC), which you'll receive by January 31 if you earned $600 or more during the calendar year.

You report this income on Schedule C (business income) as an independent contractor, where you can deduct related trading expenses like Test subscription fees, platform costs, software, and data feeds. The total net profit from Schedule C flows to Schedule SE for self-employment tax (15.3% on profits) and to Form 1040 Line 8 as your total business income.

If you made more than $1,000 in profit, you're required to file quarterly estimated tax payments using Form 1040-ES to avoid underpayment penalties. Understanding this flow and tracking deductible expenses throughout the year can reduce your tax burden by 30-50% compared to not claiming any deductions.

Quick heads-up: This article is based on my real experience with TakeProfitTrader and the info available when I published/updated this. Things change in prop trading — rules, payouts, promos, all of it.

For the absolute latest, check TakeProfitTrader´s website or their knowledge base.

Form 1099-NEC: What You'll Receive

TakeProfitTrader sends you a 1099-NEC (Nonemployee Compensation) if you withdrew $600 or more during the calendar year.

What 1099-NEC shows:

• Box 1: Total amount paid to you during the year
• Your personal info: Name, address, SSN
• TPT's info: Business name, EIN, address

Example 1099-NEC:

Box 1: Nonemployee compensation: $12,450


This means you withdrew $12,450 from PRO accounts during the year.

When you receive it: By January 31 (for the previous tax year)

How it's delivered: Email (PDF) and/or physical mail

What if you don't receive it?

If you withdrew $600+ and didn't receive a 1099 by mid-February:

1. Check spam/junk folder
2. Log into TPT dashboard and download from tax documents section
3. Email support@takeprofittrader.com with subject: "Missing 1099-NEC for [tax year]"

Important: Even if you don't receive a 1099, you're still required to report the income. Check your withdrawal history in the dashboard and manually calculate your total.

Step-by-Step: Reporting TakeProfitTrader Income

Step 1: Gather All Tax Documents

Documents you need:

• 1099-NEC from TakeProfitTrader
• Receipts/records of Test subscription payments
• Receipts for PRO activation fees, PRO resets, Test resets
• Trading software subscriptions (if any)
• Data feed costs (if any)
• Home office expenses (if applicable)

Create a simple spreadsheet:

CategoryDescriptionAmountDateIncomeTPT withdrawals (per 1099)$12,450-ExpenseTest subscriptions$2,040Jan-DecExpensePRO activation$130MarchExpenseTest resets$200VariousExpenseNinjaTrader license$720Jan-Dec

Total income: $12,450
Total expenses: $3,090
Net profit: $9,360

Step 2: Complete Schedule C (Profit or Loss from Business)

What is Schedule C?

Form used to report income and expenses from self-employment or business activity.

Where to get it: IRS.gov or through tax software (TurboTax, H&R Block, FreeTaxUSA, etc.)

Line-by-line instructions:

Part I: Income

Line A: Principal business or profession
→ Write: "Proprietary Trading" or "Day Trading"

Line B: Enter code
→ Use code: 523910 (Other Financial Investment Activities)

Line C: Business name
→ Can leave blank or write your name

Line D: Employer ID number
→ Leave blank (you don't need an EIN unless you incorporate)

Line E: Business address
→ Your home address (where you trade from)

Line F: Accounting method
→ Check "Cash" (most individual traders use cash method)

Line G: Did you materially participate?
→ Check "Yes" (you actively trade)

Line 1: Gross receipts or sales
→ Enter total from 1099-NEC Box 1
→ Example: $12,450

Lines 2-6: Usually blank for prop trading (no returns/allowances/cost of goods sold)

Line 7: Gross income
→ Same as Line 1
→ Example: $12,450

Part II: Expenses

Line 8: Advertising
→ Usually $0 (unless you run ads for a trading service)

Line 9: Car and truck expenses
→ Usually $0 (trading is home-based)

Line 10: Commissions and fees
→ Test subscriptions + PRO activation + resets + commissions paid in trading
→ Example: $2,040 + $130 + $200 = $2,370

Line 11: Contract labor
→ Usually $0 (unless you hired a VA or accountant)

Line 12: Depletion
→ $0 (not applicable)

Line 13: Depreciation
→ Computer/equipment depreciation (if applicable, use Form 4562)
→ Example: $500 (if you bought a $2,000 laptop, depreciate over 5 years = $400/year)

Line 14: Employee benefit programs
→ $0 (you don't have employees)

Line 15: Insurance
→ Health insurance premiums (if self-employed), or trading account insurance
→ Example: $0 (most traders skip this)

Line 16: Interest (mortgage, business loans)
→ Usually $0

Line 17: Legal and professional services
→ Accountant fees, lawyer fees (if any)
→ Example: $200 (paid accountant to review return)

Line 18: Office expense
→ Office supplies, printer ink, paper
→ Example: $150

Line 19: Pension and profit-sharing plans
→ Solo 401k or SEP IRA contributions (if applicable)
→ Example: $0 (most traders don't set these up in Year 1)

Line 20a: Rent or lease (vehicles/equipment)
→ $0

Line 20b: Rent or lease (other business property)
→ $0

Line 21: Repairs and maintenance
→ Computer repairs
→ Example: $80

Line 22: Supplies
→ Usually covered in Line 18

Line 23: Taxes and licenses
→ Business licenses (if required in your state)
→ Example: $0

Line 24a: Travel
→ $0 (unless you traveled for trading-related events)

Line 24b: Deductible meals
→ Business meals (50% deductible)
→ Example: $0

Line 25: Utilities
→ Portion of home internet used for trading
→ Example: $600 (if internet is $100/month and 50% is business use = $600/year)

Line 26: Wages
→ $0 (no employees)

Line 27a: Other expenses (list)
→ Trading platform subscriptions (NinjaTrader, TradingView, etc.)
→ Example: $720 (NinjaTrader Lifetime license amortized)

Line 28: Total expenses
→ Add Lines 8-27a
→ Example: $2,370 + $500 + $200 + $150 + $80 + $600 + $720 = $4,620

Line 29: Tentative profit or loss
→ Line 7 minus Line 28
→ Example: $12,450 - $4,620 = $7,830

Line 30: Expenses for business use of home
→ If you have a dedicated home office, calculate using Form 8829 or simplified method
→ Simplified method: $5 per square foot (max 300 sq ft = $1,500)
→ Example: $750 (150 sq ft office × $5)

Line 31: Net profit or loss
→ Line 29 minus Line 30
→ Example: $7,830 - $750 = $7,080

This is your taxable trading income.

Step 3: Complete Schedule SE (Self-Employment Tax)

What is Schedule SE?

Form that calculates Social Security and Medicare taxes on self-employment income.

Line 2: Net profit from Schedule C Line 31
→ Example: $7,080

Line 3: Multiply Line 2 by 92.35%
→ Example: $7,080 × 0.9235 = $6,538

Line 4: Self-employment tax
→ $6,538 × 15.3% = $1,000 (rounded)

Line 6: Deduction for half of self-employment tax
→ $1,000 ÷ 2 = $500

You owe $1,000 in self-employment tax, but you can deduct $500 of it on your 1040.

Step 4: Complete Form 1040 (U.S. Individual Income Tax Return)

Where Schedule C income goes:

Line 8: Business income from Schedule C
→ Example: $7,080

Where self-employment tax goes:

Schedule 2, Line 4: Self-employment tax from Schedule SE
→ Example: $1,000

Where self-employment tax deduction goes:

Schedule 1, Line 15: Deduction for half of SE tax
→ Example: $500

Final calculation:

Your adjusted gross income (AGI) is reduced by $500, but you owe $1,000 in SE tax.

Combined with other income:

If you had W-2 income ($40,000) + TPT income ($7,080):

• Total income: $47,080
• SE tax: $1,000
• SE tax deduction: $500
• AGI: $46,580

Quarterly Estimated Tax Payments (Form 1040-ES)

Do you need to make quarterly payments?

Yes, if:

• You expect to owe $1,000+ in taxes for the year
• You don't have withholding from a W-2 job that covers 90% of your liability

How to calculate quarterly payments:

Step 1: Estimate total annual TPT income
→ Example: $12,000 (based on current PRO performance)

Step 2: Estimate expenses
→ Example: $3,000

Step 3: Estimate net profit
→ Example: $9,000

Step 4: Calculate income tax liability (use tax brackets)
→ At 22% bracket: $9,000 × 0.22 = $1,980

Step 5: Calculate self-employment tax
→ $9,000 × 0.9235 × 0.153 = $1,270

Step 6: Total estimated tax
→ $1,980 + $1,270 = $3,250

Step 7: Divide by 4 quarters
→ $3,250 ÷ 4 = $813 per quarter

Quarterly payment schedule:

• Q1 (Jan-Mar): Due April 15
• Q2 (Apr-May): Due June 15
• Q3 (Jun-Aug): Due September 15
• Q4 (Sep-Dec): Due January 15 (next year)

How to pay:

1. Online: IRS.gov/payments → Direct Pay (free)
2. Mail: Complete Form 1040-ES payment voucher, mail with check
3. Tax software: Most software can schedule payments

Penalties for not paying quarterly:

If you owe $1,000+ and didn't pay quarterly, you'll face underpayment penalty (typically 3-8% annual interest on the underpaid amount).

Common Tax Deductions for TakeProfitTrader Traders

State and Local Tax Considerations

State income tax:

Most states require you to file a state return if you file federal. Your net profit from Schedule C flows to your state return.

Example states:

• California: File Form 540, include Schedule C income
• Texas: No state income tax
• New York: File Form IT-201, include Schedule C income
• Florida: No state income tax

Local taxes:

Some cities (e.g., NYC, Philadelphia) have local income taxes. Check your city's tax authority website.

Record Keeping Best Practices

What to save:

• All 1099 forms from TakeProfitTrader (keep for 7 years)
• Screenshots of withdrawal history from dashboard
• Receipts for all business expenses
• Bank statements showing payment to TPT

How to organize:

Use a Google Drive or Dropbox folder structure:

/Taxes
 /2024
   - 1099-NEC_TakeProfitTrader.pdf
   - Test_Subscriptions_Receipts.pdf
   - Platform_Software_Invoices.pdf
   - Home_Office_Calculation.xlsx
 /2025
   ...


Software recommendations:

• Free: Google Sheets expense tracker
• Paid: QuickBooks Self-Employed ($15/month), tracks expenses/mileage, generates reports
• Tax software: FreeTaxUSA (cheapest), TurboTax (most user-friendly), H&R Block

Common Mistakes to Avoid

Mistake 1: Not reporting income because you didn't receive a 1099

If you withdrew $400 and didn't receive a 1099, you still must report it. The $600 threshold is for TPT's reporting requirement, not your reporting requirement.

Mistake 2: Forgetting self-employment tax

Many traders calculate income tax but forget the additional 15.3% SE tax. Always factor this in.

Mistake 3: Not deducting Test fees

Test subscriptions are 100% deductible. Don't leave money on the table.

Mistake 4: Claiming home office deduction incorrectly

You can only deduct home office if it's a dedicated space used exclusively for trading. Your bedroom where you also sleep doesn't count.

Mistake 5: Not making quarterly estimated payments

If you owe $1,000+ and didn't pay quarterly, you'll face penalties even if you pay in full by April 15.

When to Hire an Accountant

You should hire a CPA if:

• You made $20K+ in TPT income (complexity increases)
• You're unsure about trader tax status (mark-to-market election)
• You have multiple income sources (W-2 + TPT + side business)
• You want to set up a Solo 401k or SEP IRA
• You're being audited by the IRS

Cost: $300-800 for basic Schedule C filing, $1,000-2,000 for complex situations

How to find one: Search "CPA trader taxes [your city]" or use services like GreenTraderTax.com (specialized in trader taxes)

Bottom Line

TakeProfitTrader income is reported on Form 1099-NEC (received by January 31 if you earned $600+), which flows to Schedule C as self-employment income where you deduct Test subscriptions, platform costs, software, and home office expenses. Net profit from Schedule C is subject to both income tax (10-37% depending on bracket) and self-employment tax (15.3%), with half the SE tax deductible on Form 1040.

If you expect to owe $1,000+ in taxes, you must file quarterly estimated payments using Form 1040-ES to avoid underpayment penalties. Common deductible expenses include Test fees ($2,040 annually for one account), PRO activation ($130), resets, trading software ($720 for NinjaTrader), and home internet (partial).

Proper expense tracking and deductions can reduce your effective tax rate by 30-50%, and traders earning $20K+ should consider hiring a CPA specialized in trader taxes to optimize their filing and explore mark-to-market elections or retirement account options.

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