Just wanted to add one more important detail that hasn't been mentioned yet - make sure you're actually qualifying as a "trader" rather than an "investor" before making the 475(f) election. The IRS has specific criteria for this, including trading frequency, holding periods, and whether trading is your primary business activity. If you don't meet the trader status requirements, the election won't be valid and you could face issues down the road. The basic test is whether you're engaged in trading as a trade or business, not just for investment purposes. Things like having substantial trading activity, short holding periods, and deriving income from daily market movements rather than long-term appreciation all support trader status. I'd recommend documenting your trading activity thoroughly to support your qualification if the IRS ever questions it.

Great discussion everyone! As someone who's been through this process, I wanted to add a few practical tips that helped me. First, when you create your election statement, make sure to keep multiple copies - one for your records, one with your tax return, and a backup. I actually sent mine via certified mail just to have proof of delivery, even though I was filing electronically. Also, once you make the 475(f) election, remember it's generally irrevocable without IRS consent. This means you'll need to use mark-to-market accounting for all future years unless you get permission to change. Make sure you're really committed to being a full-time trader because switching back requires filing Form 3115 and getting IRS approval. One last thing - start keeping meticulous records right away. With MTM accounting, you'll need to mark all your positions to market value at year-end, which means tracking the fair market value of every security you hold on December 31st. This becomes much easier if you start organizing your record-keeping system early in the year rather than scrambling at tax time.

I've been submitting Form 3520 for 5 years now, and what I've learned is that the IRS basically never acknowledges receipt unless there's a problem. When they found an issue with mine one year, I suddenly got a letter! So I guess no news is good news? My tax attorney says the best practice is: 1) certified mail with return receipt, 2) take photos of all forms before sending, 3) keep all mailing receipts, and 4) document all correspondence. He says in his 20 years of practice, he's never seen the IRS confirm receipt of a properly filed 3520 except by not sending penalty notices.

I completely understand the frustration with Form 3520 - it's one of the most anxiety-inducing forms to file because of the complete lack of confirmation from the IRS. After dealing with this for several years myself, here's what I've found works best: The certified mail approach is absolutely essential, but I also recommend keeping a detailed spreadsheet with filing dates, tracking numbers, and delivery confirmations. I photograph every page of the form before mailing and store everything digitally. One thing that helped me was calling the Practitioner Priority Service line (if you have a tax professional who can call on your behalf) - they sometimes have better access to information about specialty forms like 3520. Regular taxpayers can't use this line, but your CPA or enrolled agent can. Also, while Form 3520 doesn't typically show on standard transcripts, if you've been filing consistently and haven't received any penalty notices, that's usually a good sign they're receiving your submissions. The IRS is unfortunately very good at sending penalty letters when they think you haven't filed! For peace of mind going forward, consider working with a tax professional who specializes in international tax matters - they often have better systems for tracking these types of submissions and can provide additional documentation if needed.

This has been an incredibly informative discussion! I'm currently serving as trustee for my cousin's special needs trust and have been struggling with many of these same issues. Reading through everyone's experiences has really clarified some things I was uncertain about. I wanted to share something that might be helpful - we discovered that our state (Ohio) has a Special Needs Alliance chapter that offers free educational workshops for trustees. They covered topics like the interaction between trust taxation and benefit preservation, proper documentation practices, and coordination with ABLE accounts. The workshop was led by an attorney who specializes in disability planning and a CPA who handles nothing but special needs trust returns. One thing they emphasized that I haven't seen mentioned here is the importance of getting a proper disability certification letter for qualified disability trust status. While most special needs trusts automatically qualify, having documentation from a physician confirming the beneficiary meets Social Security disability criteria can be important if you're ever audited. The IRS apparently looks for this during examinations of qualified disability trust returns. Has anyone here had experience with IRS audits of these types of trusts? I'm curious about what specific documentation they typically request and how common these audits actually are for smaller trusts like ours that only generate a few thousand in annual income.

The Special Needs Alliance has chapters in most states and many do offer educational resources! You can find your local chapter through their national website at specialneedsalliance.org. Even if your state chapter doesn't offer regular workshops, many have resource libraries and can connect you with attorneys and CPAs who specialize in disability planning. I've found their materials particularly helpful because they address the intersection of tax law, disability benefits, and trust administration - which is exactly what we need as trustees but is rarely covered comprehensively elsewhere. Regarding the disability certification letter, you're right that SSI eligibility is strong evidence, but having a physician's letter specifically referencing the Social Security disability criteria can be helpful documentation for your trust file. Some attorneys recommend getting this updated every few years, especially if the beneficiary's condition could potentially change. One other resource I discovered is the Arc's National Center on Criminal Justice and Disability - they have some excellent guides on financial management for people with disabilities that helped me understand the broader context of what we're trying to accomplish with these trusts beyond just the tax compliance aspects.

I went through this exact same situation last year with about $25 in stock profits. After reading through all the comments here, I decided to call the IRS directly (yes, it took forever to get through). The agent told me something that might help clarify things for everyone: The key isn't the profit amount - it's whether your broker reported the cost basis to the IRS on your 1099-B. Look at your 1099-B form and check if there's basis information included. If it shows "basis reported to IRS" or has the cost basis filled in, then the IRS already has all the information they need and you likely don't need Form 8453. However, if your 1099-B shows the sale proceeds but NOT the cost basis (common with older accounts or certain types of trades), then yes, you need to send Form 8453 with documentation regardless of the tiny profit amount. For my $25 situation, it turned out my broker HAD reported the basis, so I didn't need to send anything extra. Check your 1099-B first before assuming you need to mail anything!

This is really helpful information from everyone! I'm dealing with a similar situation but with crypto trades instead of stocks. Made about $45 in profits from some Bitcoin trades last year and my tax software is also telling me I need Form 8453. From what I'm reading here, it sounds like the key is whether the exchanges reported my cost basis to the IRS. Most crypto exchanges don't provide 1099-B forms like stock brokers do - they usually just give you a 1099-K or their own transaction summary. Does anyone know if the same "basis reported to IRS" rule applies to cryptocurrency transactions, or do crypto trades automatically require the Form 8453 documentation regardless of the amount? I'm trying to figure out if I can avoid mailing in 20+ pages of crypto transaction records for such a small gain.

Whatever you do, stay away from the "free" tax preparation software. I tried using FreeTaxUSA for my side gigs last year and it was TERRIBLE for handling multiple 1099s properly. Ended up having to pay a professional to fix all the mistakes after I got an audit notice.

Reading through all these comments, I'm seeing a lot of different options mentioned. As someone who's dealt with IRS compliance issues for small businesses, I'd suggest being really careful about who you trust with a complex situation like yours. The $800 Jackson Hewitt quote isn't unreasonable given your circumstances - 18 income sources plus an unfiled year is genuinely complex work. But before you commit, I'd recommend getting a second opinion from an Enrolled Agent (EA) or CPA who specializes in gig worker taxes. They're often more experienced with the specific deductions and strategies that can really benefit someone in your situation. Also, since you mentioned getting over $6,300 back, make sure whoever prepares your return explains the refund breakdown. With that much self-employment income, you want to understand if you should be making quarterly estimated payments going forward to avoid penalties next year. That's something a good tax professional should definitely discuss with you as part of their service.