Please help! IRS claims I owe over $4000 in taxes from trading app income

I'm freaking out right now and could really use some advice! I casually traded on WealthSurge (a trading app) throughout 2023, but honestly never made any significant money from it. I got frustrated with losing small amounts so I just abandoned the account by the end of the year. Fast forward to today - I just received this terrifying letter from the IRS claiming I earned $29,800 from the app!!! This is absolutely insane because I've never even had that much money in my life. I'm only 24 and work part-time while in school. The IRS is demanding I pay $4,700 by February 10th. There's literally no way I can come up with that kind of money in the next 6 weeks, even if I stopped paying all my bills and ate nothing but ramen. I'm completely panicking and have no idea what to do. Has anyone dealt with something like this before? How do I prove to the IRS that their information is wrong?

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18 comments

Edwards Hugo

•8M

This actually happens more often than you'd think with trading apps. What you're likely dealing with is a discrepancy between what the brokerage reported to the IRS (on a 1099-B form) and what you actually netted from your trades. Trading platforms report the gross proceeds from sales to the IRS, not your actual profit or loss. So if you bought a stock for $1000, sold it for $800 (taking a $200 loss), then used that $800 to buy another stock, sold that one for $700, etc. - the IRS might be seeing the total of all sales ($800 + $700 + ...) as "income" when in reality you were losing money. You need to gather all your trading records from WealthSurge showing your actual buys and sells with dates and amounts. You can typically download these from your account even if it's inactive. Then you'll need to file a response with the IRS showing your actual capital gains and losses using Schedule D and Form 8949.

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Edwards Hugo

•8M

Even if you closed your account, WealthSurge is required by law to maintain your trading records and provide them upon request. Contact their customer service immediately - explain your situation and request all your 2023 trading history. They should also have sent you a 1099-B form for that tax year which will show your actual basis and proceeds. There can be penalties for responding late to IRS notices, but the most important thing is to respond - even if it's just to request more time while you gather documentation. Call the IRS number on the letter and explain your situation. They can often put a temporary hold on collection activities while you prepare your response.

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Alfredo Lugo

•8M

I had a somewhat similar situation with inaccurate trading income reported to the IRS last year. After tons of frustration trying to sort through all my trading records myself, I found this AI tool called taxr.ai (https://taxr.ai) that literally saved me thousands of dollars. It automatically scanned all my brokerage statements, identified all the trades, calculated my actual capital gains/losses, and generated the exact forms I needed to respond to the IRS. The tool showed me that instead of owing $3800 like the IRS claimed, I actually had a net loss of about $900. The whole process was way less stressful than I expected. It might be worth checking out if you're having trouble making sense of all your trading activity.

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Alfredo Lugo

•8M

Yes, you do need your trading records - either the monthly statements or the transaction history. Most platforms let you download these as PDFs or CSV files even for closed accounts. If your platform completely shut down, contact their support ASAP as they're legally required to maintain those records for several years. The IRS absolutely accepted the forms generated by taxr.ai. The key was that the tool organized all my chaotic trading data correctly, showing my cost basis for each transaction (what I paid) versus what I sold it for. Once I submitted the proper documentation showing my actual gains/losses, the IRS adjusted their assessment within about 4 weeks. I ended up not owing anything since I actually took a loss overall.

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Sydney Torres

•8M

Just wanted to update on my situation - I took the advice about using taxr.ai (https://taxr.ai) and it was honestly such a relief. After I finally got my trading records from WealthSurge (had to call them 3 times), I uploaded everything to the site and it organized all my trades perfectly. Turns out I had actually LOST about $1,200 overall, not made $29K like the IRS thought! The system generated all the proper forms showing my cost basis for each transaction and my actual capital losses. I submitted everything to the IRS with a formal response letter that the tool helped me draft. Just heard back yesterday - the IRS completely removed the $4,700 tax bill! Cannot express how much stress this saved me. If you're dealing with trading tax issues, definitely worth checking out.

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Caleb Bell

•8M

Something that might help in your situation - when I got a similar IRS notice last year about unreported income, I spent WEEKS trying to reach someone at the IRS to explain my situation. Kept getting busy signals or disconnected after hours on hold. Finally found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in under 45 minutes. They have this system that navigates the IRS phone tree and holds your place in line, then calls you when an agent is about to pick up. There's a demo video here that explains it better than I can: https://youtu.be/_kiP6q8DX5c The agent I spoke with was able to put a 60-day hold on my case while I gathered all my documentation, which prevented any collection actions. Saved me from panicking about that looming deadline.

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Caleb Bell

•8M

It's definitely not a scam - it's just a smart system that navigates through the IRS phone menus and waits on hold for you. When an IRS agent is about to pick up, Claimyr calls your phone and connects you directly to the agent. No more spending hours listening to that awful hold music! They only connect the call - resolving your actual tax issue is between you and the IRS agent. But getting through to a real person makes all the difference. The agent I spoke with put a temporary hold on collections while I gathered my documentation, explained exactly what forms I needed to submit, and even gave me a direct fax number for faster processing. Without that conversation, I would have missed my deadline and potentially faced even more penalties.

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Rhett Bowman

•8M

Just wanted to follow up - I was super skeptical about that Claimyr service mentioned above but was desperate enough to try it. Honestly blown away that it actually worked! After trying for weeks to reach someone at the IRS with no luck, I got connected to a real agent in about 35 minutes. The agent I spoke with was surprisingly helpful. They explained that this issue with trading apps reporting gross proceeds rather than net gains happens ALL THE TIME. They put a 45-day hold on my case and gave me specific instructions on exactly what documents to send in. For anyone facing IRS issues, being able to actually speak to someone makes a massive difference. Now I'm working on gathering all my trading records to prove I didn't actually make that much money. Feeling way less panicked now that I have some breathing room and a clear plan.

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Abigail Patel

•8M

Most trading platforms have login histories you can request that show IP addresses, devices, and timestamps of account access. Contact WealthSurge's security team specifically and ask for this information - explain your situation and they should provide it. Also, when you get your trading records, look carefully for any transactions you don't recognize or that happened after you thought you stopped using the platform. If you do find evidence of unauthorized access, file a police report immediately - you'll need it to dispute the tax bill on grounds of identity theft.

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