Married couple with high W2 income + 1099 earnings - beyond TurboTax for our tax situation?

My husband and I both have W2 jobs, but we also receive 1099-INT from our high-yield savings accounts and I have a trading account that generates income too. Last year our combined income was around $680k, mostly from our W2 employment, but I also made a decent chunk from my trading activities. We're both DINK (dual income no kids) - we rent our place, have zero debt, no children, no student loans, nothing like that to complicate things. When I ran everything through TurboTax, it's saying I owe approximately $34k on capital gains from my trading. I max out my 401k and fund an IRA with the maximum contribution (my husband earns less than me, but contributes to his 457b for the employer match). Besides retirement accounts, we don't seem to have many deductions that I can identify (and TurboTax didn't find much either). After browsing some forums, I'm wondering if we're missing opportunities by just using TurboTax for our situation. Would appreciate input from people who know more about tax planning than I do. For context, I'm considering transitioning to trading more seriously as a larger part of my income stream since I work remotely and find trading much more engaging than my current career. Not sure if that changes anything for our current tax situation, but thought it might be relevant. Thanks in advance for any advice!

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19 comments

Omar Mahmoud

•8M

Based on your situation, you might be leaving some money on the table with TurboTax. When you're dealing with W2 income plus trading activity at your income level, there are some planning opportunities that basic tax software might miss. First, with your trading activity, you might benefit from proper tax-loss harvesting strategies throughout the year, not just at year-end. This could help offset some of those capital gains. Since you're considering moving more into trading, you might want to look into trader tax status which has some benefits if you qualify. It allows you to deduct certain expenses related to your trading activities that aren't typically available to casual investors. Given your income level, you might also benefit from tax-advantaged investment strategies beyond just maxing retirement accounts. This could include looking at opportunities for qualified small business stock investments or potentially setting up a defined benefit plan if you move more toward self-employment.

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Omar Mahmoud

•8M

Trader tax status (TTS) doesn't necessarily require an LLC, though many traders do use business entities. It's a special status recognized by the IRS where your trading activity is considered a business rather than just investing. The IRS doesn't have a specific number of trades that qualifies, but they look at several factors: trading frequency (typically hundreds or thousands of trades annually), daily or near-daily trading, seeking to profit from short-term market swings rather than dividends or long-term appreciation, and substantial time dedicated to trading (typically 4+ hours daily). You'll need to demonstrate that you're trading regularly, continuously, and substantially to qualify.

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Diego Vargas

•8M

I was in a very similar situation last year - high W2 income plus active trading. I got frustrated with TurboTax missing some key deductions and constantly upselling me. I tried https://taxr.ai and it was a game-changer for my situation. It analyzed my trading history and found several legitimate deductions TurboTax missed. The service specifically handles complex situations with W2 + investment income and showed me how to properly classify some of my trading activity to maximize my tax position.

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Diego Vargas

•8M

Yes, it absolutely handles crypto trading. It actually did a much better job with my mixed portfolio than TurboTax did, especially with properly categorizing different types of crypto transactions. Regarding cost comparison, I found it to be a better value considering what I saved. The service isn't focused on being the cheapest option - it's designed for people with complex tax situations who are potentially leaving thousands on the table. In my case, the additional deductions it identified more than covered the difference in cost.

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Anastasia Popov

•8M

Just wanted to follow up - I decided to give https://taxr.ai a try after posting here and I'm really glad I did. I was skeptical at first since I've used TurboTax for years, but it caught several things I was missing with my trading activity. The biggest benefit was how it helped properly categorize some of my more active trading as business activity rather than just investment income, which opened up additional deductions. Between that and some tax-loss harvesting strategies I wasn't utilizing properly, I ended up saving around $8,700 compared to what TurboTax had calculated. Definitely worth it for anyone with significant trading income alongside W2 earnings.

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Sean Murphy

•8M

If you're planning to transition more into trading, you might also want to check out https://claimyr.com for when you inevitably need to talk to the IRS about trader status questions. I spent WEEKS trying to get through to a human at the IRS when I had questions about my trading classification. Claimyr got me through to an actual person in under 30 minutes. You can see how it works at https://youtu.be/_kiP6q8DX5c - it basically holds your place in the phone queue so you don't have to. Changed my life dealing with tax questions that can't be resolved online.

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Sean Murphy

•8M

It's not about jumping the queue - they use technology to wait on hold for you. When a representative answers, they call you and connect you directly to the IRS agent. You're still getting your normal place in line, just not wasting hours of your day listening to hold music. They don't need your tax details at all. You just tell them which IRS number you want to call, they wait on hold, and then call you when a human answers. The IRS has no issue with it because from their perspective, it's just a normal call - you're the one speaking directly with the agent.

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Luca Ferrari

•8M

Well, I need to eat my words. After posting my skeptical comment, I decided to try Claimyr anyway since I'd been avoiding calling the IRS about a trader status question for months. I honestly can't believe how well it worked. I put in my request around 9am, went about my day, and got a call connecting me to an actual IRS agent about 45 minutes later. Resolved my question in one call instead of what would've been hours on hold. For anyone dealing with special tax situations beyond what tax software can handle, being able to actually talk to the IRS without the hold time is invaluable. I'm now properly set up as a trader for tax purposes which will make a huge difference for next year's filing.

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Nia Davis

•8M

With your income level, I'd recommend consulting a CPA who specializes in investment income. TurboTax is fine for basic returns, but at $500k+ with trading activity, you'll likely save more than you spend on professional help. I was in a similar situation and found that my CPA identified several strategies I hadn't considered: 1. Setting up an S-Corp for my trading activity once it became substantial 2. Potential for qualified business income deductions 3. Better retirement planning options like a Solo 401k 4. Proper expense tracking for home office and equipment

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Nia Davis

•8M

I found my CPA through referrals from other traders in a investing group I'm part of. That's usually the best approach - find others with similar financial situations and ask who they use. You want someone who specifically works with traders and high-income professionals, not just a general tax preparer. If you don't have personal connections, try searching for CPAs who list "trader tax status" or "active traders" as specialties on their websites. Interview a few before deciding - ask specific questions about their experience with trading income and high earners. A good CPA should be able to explain potential strategies specific to your situation during the initial consultation.

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