Little Bird Trading
Trader Tax Status (TTS) Guide for 2026
$49.99, one-time digital download
Trader Tax Status (TTS) Guide for 2026
How Trader Tax Status actually works: what the IRS tests are, what qualifying looks like in practice, and the two elections that decide whether it counts for tax year 2026.
What is inside
- What Trader Tax Status is, and the three IRS tests.
- Rules of thumb for qualifying, and what usually disqualifies.
- W2 salaries, payroll taxes and the quarterly deadlines.
- The S Corp election, its deadline and late-election relief.
- The mark-to-market election, and Forms.
- The business return: Forms and Schedules.
- What is new for 2026.
- A note on state and local guidelines.
Included with the guide
- The guide as a PDF.
- An example mark-to-market accounting spreadsheet.
Who this is for
- US-based traders and investors.
- Traders moving from ad-hoc bookkeeping to structured reporting.
- Anyone preparing to discuss TTS and mark-to-market with an accountant.
Educational content only. Not tax, legal or investment advice. Little Bird Trading is not a CPA.
What changed in 2026
FINRA eliminated the pattern day trader designation and the $25,000 minimum equity requirement effective June 4, 2026, replacing them with an intraday margin standard. Brokers may phase it in until October 20, 2027, so your own broker may still apply the old rule.
Common questions
- What is Trader Tax Status?
- Trader Tax Status lets an active trader have their trading treated as a business rather than as investing.
- How do you get Trader Tax Status?
- There is no form that grants it and no approval letter that confirms it. It is a position you take on your return and must be able to support.
- How do you apply for TTS?
- There is no application. Traders who want the business structure typically form an entity and make two separate elections, each with its own filing window measured from the start of the tax year.
- Do you need $25,000 for Trader Tax Status?
- Not as a tax rule, and as of 2026 not as a margin rule either.
Educational only, and not tax advice, Little Bird Trading is not a CPA or a licensed tax adviser. The elections involved are difficult to undo and are lost by a single missed date, so confirm your own situation with an accountant who has traders as clients. Related reading: qualifying for TTS and the Section 475 election.
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Educational content only. Not investment advice. Not a recommendation or endorsement of any security or strategy.