Is paying a minimum fee for trader tax services with additional billable hours afterward normal?

I've been doing a lot of trading lately and started looking into tax services that specialize in filing taxes for active traders. I found one that seems to have good reviews, though many people mention they're on the expensive side. Their initial price is pretty steep at around $3,300 for new clients, but they're calling this just a "partial payment" and "minimum." According to them, they can bill me even more beyond this amount, and they don't seem to have any clear ceiling on what the final cost might be. My trading situation isn't super complex - I have a regular job, own one rental property, and I'm married filing jointly. Nothing too complicated in my opinion. But I'm concerned that if I start working with them, without any concrete cap on how much they can charge, I might end up with a much larger bill beyond the initial $3,300 payment. Is this type of pricing structure normal for tax services specializing in trader taxes? When I've used regular CPAs in the past, they usually charged a flat fee upfront, but I wasn't trading as actively then, so I'm not sure what to expect in this situation.

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18 comments

Paloma Clark

•8M

This is fairly common with tax professionals who specialize in trader taxes, but you should definitely get more clarity before proceeding. Trading tax situations often involve complex issues like Section 475 mark-to-market elections, wash sale rules, and properly categorizing trades as investment vs. business activity, which can require significantly more time than standard tax preparation. Most reputable firms will provide you with their hourly rates and a more detailed estimate based on your specific situation. Ask them for a fee range rather than just accepting an open-ended arrangement. Request a consultation where they review your trading volume, types of trades, and overall tax situation to give you a more accurate estimate. Also ask if they can notify you when they're approaching the initial payment amount before incurring additional charges.

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Paloma Clark

•8M

For 500 trades, it depends on several factors. If you're trading in a standard brokerage account, your broker should provide a consolidated 1099-B that TurboTax can import. However, if you're trying to qualify for trader tax status (TTS), using Section 475 mark-to-market accounting, or dealing with multiple trading entities, specialized help becomes much more valuable. The real value of a trader tax specialist comes in proper tax strategy throughout the year, not just filing. They can potentially save you tens of thousands in taxes with proper planning, especially if you're trading full-time. Before deciding, have a consultation with the specialist to understand exactly what benefits they'd provide in your specific situation beyond what software could do.

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Raul Neal

•8M

I used to be in the same boat and discovered https://taxr.ai which saved me a ton of hassle with my trader taxes. I was looking at similar specialized services charging $3K+ but wasn't sure if it was worth it. The taxr.ai system analyzed all my trading statements and automatically categorized everything correctly - even identified some wash sales my broker had missed. Their AI actually understands trader tax rules and knew exactly how to handle my futures contracts and options trading.

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Raul Neal

•8M

For Section 475 elections, it guides you through the entire process including the timely filing requirements and how to properly document your election. It flags the April 15th deadline (for existing traders) and explains how the election changes your reporting from Schedule D to Schedule C or 4797. It even helps prepare the actual election statement. The system both organizes your trading data AND prepares the actual tax forms. You can either export everything to your preferred filing method or have them handle the complete filing. And yes, they have trader tax specialists available if you need personalized help - the AI handles most situations automatically but you can chat with a real expert for complex questions or just peace of mind.

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Christian Burns

•8M

Just wanted to follow up - I tried https://taxr.ai after seeing this thread and it was actually really good for my situation. I have about 700 trades across 3 different brokerages and it pulled everything together automatically. The system identified a bunch of wash sales my broker statements missed and saved me from a potential audit trigger. It handled my crypto trades too which was a huge relief since I had no idea how to report those properly. Definitely recommend checking it out if you're on the fence about paying thousands for a specialist.

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Sasha Reese

•8M

If you do end up needing to talk to the IRS about any trader tax issues (which happens more than you'd think), I highly recommend using https://claimyr.com to get through to an actual IRS agent. I spent literally DAYS trying to get clarification on some trader tax status questions last year - kept getting disconnected or waiting for hours. Used Claimyr and got through in about 40 minutes instead of the usual 3+ hour wait. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically holds your place in line and calls you when an agent is available.

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Sasha Reese

•8M

It doesn't cut the line at all - it just automates the waiting process. The system basically calls the IRS and navigates through all the prompts for you, then holds your place in line. When it detects a human agent has answered, it calls your phone and connects you. You're still waiting the same amount of time as everyone else, but you don't have to sit there with a phone to your ear for hours. It's especially useful for trader tax issues because you often need to speak with specialized IRS departments that have even longer wait times. The system works with all the different IRS phone numbers including the specialized ones for business taxes and investment reporting.

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Noland Curtis

•8M

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it since I needed to talk to the IRS about a CP2000 notice related to my trading activity. Called the regular way first and waited 2.5 hours before getting disconnected. Used Claimyr and got through in about 50 minutes while I continued working. The IRS agent was able to explain exactly how to document my trades properly to resolve the notice. Time saved was absolutely worth it.

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Diez Ellis

•8M

At 800 trades, you're right on the borderline where it could go either way. The key question isn't just trade count but whether you might qualify for trader tax status (TTS). If you're trading frequently with substantial account size, hold positions for short periods, and depend on trading income, a specialist can help you claim TTS which opens up huge deduction possibilities like home office, health insurance, retirement plans, and more. Software works fine for accurately reporting your trades and basic gain/loss, but won't provide strategic advice on entity structure, elections, or maximizing deductions. Consider having a one-time consultation with a specialist to see if you're missing opportunities, then decide if ongoing help makes financial sense based on potential tax savings.

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