Throughout the Year

Record Everything

The best tax preparation happens all year:

• Record payouts when received

• Record expenses when paid

• Update challenge costs accurately

• Note income sources clearly

Use Accurate Dates

Transaction dates determine which tax year they fall in. December 31st vs. January 1st matters!

Categorize Properly

Put expenses in the right categories now. Recategorizing 200 transactions in April is painful.

Keep External Records

The platform tracks your data, but also save:

• Receipts (digital copies)

• Bank statements

• Prop firm payout confirmations

• Invoices you've issued

Pre-Tax Season Prep (January)

Verify the Previous Year's Data

Payouts Check:

1. Go to Funded Accounts

2. Filter to previous year

3. Verify all payouts are recorded and Approved

4. Cross-reference with prop firm statements

Expenses Check:

1. Go to Transactions

2. Filter expenses for previous year

3. Verify all are marked Paid

4. Cross-reference with bank statements

Challenge Costs Check:

1. Go to Challenges

2. Verify all costs are recorded

3. Check for any missing refunds

Reconciliation

Compare platform totals to external records:

Investigate discrepancies before generating reports.

Generate Reports

Export the three main reports:

1. Annual Tax Summary — Year overview

2. Income Report — Detailed income list

3. Expense Report — Detailed expense list

Generate both PDF (for reference) and CSV (for analysis).

What to Give Your Accountant

The Reports

Annual Tax Summary PDF: High-level overview with totals.

Income Report PDF: Transaction-level detail for income.

Expense Report PDF: Transaction-level detail for expenses.

Additional Context

Write a brief note explaining:

• "I'm a prop firm trader. I trade prop firm capital and receive profit-share payouts."

• "Challenge costs are fees paid to take prop firm evaluations."

• "Refunds are returns of challenge fees, typically when passing."

• "I trade in [currencies] and have not converted values."

This helps accountants unfamiliar with prop trading understand your business.

Supporting Documents

• Bank statements showing payout deposits

• Prop firm payout confirmations

• Major expense receipts

• Private account trading summaries (if relevant)

Tax Questions to Discuss

Ask your accountant:

Income Classification

"How should prop firm payouts be classified—business income, self-employment income, or something else?"

Expense Deductibility

"Are my challenge costs fully deductible as business expenses?"

Refund Treatment

"Should refunds reduce my expenses or be counted as income?"

Multi-Currency

"How should I handle transactions in different currencies?"

Private Account Trading

"How do I report gains/losses from my personal trading accounts?"

Platform Reports vs. Tax Filing

What Reports Provide

• Organized summary of income and expenses

• Transaction-level detail

• Categorized by type

• Grouped by currency

What Reports Don't Provide

• Official tax forms

• Tax calculations

• Currency conversions

• Tax advice

Use reports as documentation; let your accountant prepare actual filings.

Multi-Currency Considerations

If you have transactions in multiple currencies:

Platform Shows

Each currency separately with its own total.

Tax Filing May Require

• Conversion to your local currency

• Specific exchange rates (daily, monthly, or year-end)

• Documentation of rates used

Discuss with your accountant which approach to use.

Estimated Taxes

If you're self-employed, you may need to pay quarterly estimated taxes:

Use the Platform to Track

• Generate quarterly income totals

• Estimate tax liability

• Stay ahead of payments

Set Aside Money

Based on your income, set aside a percentage for taxes. Don't spend all your payouts!

Record Retention

Keep tax records for the period required by your jurisdiction (often 3-7 years):

Digital Archive

• Downloaded reports

• Bank statements

• Receipts

• Prop firm statements

Organization

Create folders by year:

Example
HTML
Copy
2024 Taxes/
├── Annual Summary.pdf
├── Income Report.pdf
├── Expense Report.pdf
├── Bank Statements/
├── Receipts/
└── Prop Firm Confirmations/

Common Tax Season Mistakes

Waiting Until April

Don't wait until the last minute. Prepare in January while the year is fresh.

Missing Income

Ensure all payouts are recorded. Prop firms may report your income to tax authorities.

Forgetting Deductions

Track all business expenses. Missed deductions mean paying more than necessary.

Incorrect Dates

Transactions on wrong dates can land in the wrong tax year.

No Professional Help

Trading taxes can be complex. Work with an accountant, especially your first year.

Tax Season Checklist

By January 31:

• [ ] All previous year data verified

• [ ] Reports generated

• [ ] Discrepancies investigated and resolved

By February 15:

• [ ] Reports shared with accountant

• [ ] Supporting documents provided

• [ ] Questions prepared for accountant

By Filing Deadline:

• [ ] Tax return reviewed and filed

• [ ] Any taxes owed paid

• [ ] Copies saved for records

Next: Common Mistakes to Avoid →