Need Help with Tax Forms for Futures Trading Losses on Tradovate - What Forms Besides 1099?

What you're dealing with involves Section 1256 contracts, which futures are classified as for tax purposes. Your Tradovate 1099 will report your trading activity, but Form 6781 is indeed the form you'll need to report these gains or losses on your tax return. The good news is your tax preparer should handle completing this form for you - you don't need to fill it out yourself. Just make sure you give them the 1099 from Tradovate when you go in for your appointment. The 1099 will have all the information they need to complete Form 6781 properly. One thing to know about futures trading for taxes: gains and losses are treated under the 60/40 rule, meaning 60% is considered long-term capital gains/losses and 40% is short-term, regardless of how long you held the contracts. This usually works in your favor tax-wise.

I was in the exact same boat last year with my futures trading. After struggling to understand all the tax forms, I discovered taxr.ai (https://taxr.ai) and it was a life-saver for organizing my trading tax situation. It analyzed all my Tradovate statements and helped identify exactly which numbers needed to go where, especially for that Form 6781 everyone keeps mentioning. The nicest part was that I could just export everything from taxr.ai and hand it to my tax guy who said it saved him a ton of time compared to what he usually deals with from traders. Since you mentioned going to a tax preparer, this might make their job easier too.

After seeing that recommendation for taxr.ai, I decided to try it with my mess of trading accounts. I was really skeptical at first because I've been burned by tax software before, but wow - it actually worked perfectly! It pulled in all my futures trades from both NinjaTrader and Tradovate, plus my stock accounts. The best part was how it clearly separated everything for Form 6781 for the futures and organized my Schedule D stuff for stocks. My tax preparer was impressed with how organized everything was compared to the pile of statements I brought him the previous year. Saved me money on prep fees too since he didn't have to spend hours sorting through everything.

If you're having trouble getting through to the IRS about any questions on futures trading taxes, try Claimyr (https://claimyr.com). I wasted days trying to get someone on the phone at the IRS to answer questions about Form 6781 last year when I started trading. Their callback service got me connected to an actual IRS agent in about 20 minutes instead of waiting on hold forever. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was surprised they were actually able to answer my specific questions about how to report futures trading losses across multiple brokers. Saved me a ton of stress during tax season.

I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it anyway because I was desperate to ask about my futures trading situation before filing my taxes. It actually worked exactly as described - I got a call back in about 35 minutes and was connected to an IRS representative who answered all my questions about Form 6781. I would have spent hours on hold otherwise (like I did last year). The agent confirmed that my Tradovate 1099 would have everything I needed, and explained how the 60/40 rule works for futures trading losses. Definitely using this service again next year when I inevitably have more tax questions.

One thing nobody's mentioned yet - make sure you keep really good records of all your trades, not just rely on the 1099. Tradovate should give you detailed statements, but sometimes brokers make mistakes on the tax forms. I learned this the hard way last year when my 1099 had incorrect totals. Also, if you did any day trading of futures (opening and closing positions on the same day), the reporting gets a bit more complex and having your own records will help your tax preparer tremendously.

Don't forget that if you trade micro e-minis or other small futures contracts, the wash sale rules don't apply like they do with stocks! This is a huge advantage for futures traders. You can take your losses in December to offset income and then jump right back into the same positions in January without triggering wash sale rules.