The article on how to deduct home office expense for an MTM trader is incomplete and may result in you paying more taxes that you are supposed to because NIIT need to be adjusted manually.
If you find this article headlined:
How do I report my trader activity with (or without) Section 475(f) election in TurboTax?
SOLVED by TurboTax
140Updated December 21, 2021
When you find this article on how to deduct your HO expense as a trader, it may seem to solve your problem, however using this method is incomplete. By modifying the C2 of 8829, it does allow you to deduct your HO expenses in TT as a trader by manually putting in your income, HOWEVER, it does not explain to you that you must ALSO modify 8960 worksheet Line 7 to report ALL of your business expenses and HO deduction as a negative number.
If you do not make this entry, you are paying NIIT tax on your allowed business expenses which are exempt from those taxes. (they are not part of income, they are expenses)
If any of you are using the Green Trader tax method to move income from 4797 part ii to the Schedule C other income, this resolves the problem much cleaner. The only caveat is you must only move enough to cover all of your expenses and HO office deduction. If you move more than those amount (i.e. your Schedule C shows a positive number instead of 0) that you will not be paying the proper amount of NIIT taxes.
I hope this helps other traders using MTM save on taxes that Turbotax advice appears to miss.
It would be nice if TT would handle a trader business better.
