How can I make the MTM election for the next year?

[dqr930]

TTS designated traders must make a mark-to-market election on April 15 of the previous tax year. How can I make the MTM election in Turbotax?

[Coleen3]

TurboTax does not support the MTM process. You can download the form from IRS. 

https://taxmap.irs.gov/taxmap/ts0/howtomakethemarkto_o_6170beaa.htm

Refer to the Form 1040, Schedule D Instructions, Capital Gains and Losses for more information on how to make the mark-to-market election. It's important to note that in general, late section 475(f) elections aren't allowed.

After making the election to change to the mark-to-market method of accounting, you must change your method of accounting for securities under Revenue Procedure 2018-31. In addition to making the election, you'll also be required to file a Form 3115.pdf, Application for Change in Accounting Method. Publication 550 describes the procedures for making an election under the section called "Special Rules for Traders in Securities." Non-filing of the Form 3115 mentioned above won't invalidate a timely and valid election.

If you've made a valid election under section 475(f), the only way to stop using mark-to-market accounting for securities is to file an automatic request for revocation under Revenue Procedure 2018-31, Section 24.02. Under that revenue procedure, the request for revocation must be filed by the original due date of the return (without regard to extensions) for the taxable year preceding the year of change (the year of change is the first taxable year the revocation is to be effective). This revocation notification statement must be attached to either that return or if applicable, to a request for extension of time to file that return. Late revocations won't generally be allowed except in unusual and compelling circumstances.

[Derek_H]

Hi Coleen - 

Thank you for your very informative email.  Do you know whether TurboTax supports the MTM accounting method for trading after the MTM election is made?  I made the election for the 2018 tax year outside of TurboTax but would like to return to TurboTax this year.  Thank you for your help!

[VictoriaD75]

TurboTax does not support the MTM process. You can download the form from IRS. 

See additional information in the thread below:

Mark-to-Market Election

[lauriofam5]

Hi!

thanks for the MTM information. 

After I have made this selection for next year, how does filing my taxes with TTO change next year? Do I need to begin using a CPA for that year?  Or can I paper file?

I plan on filing the forms with the IRS this year as I have begun day trading full time for income so next year I can utilize MTM status. I hate not using TTOnline

Thanks!

[olio1987]

Because turbo tax doesn’t support this function ,  I e-filed my return on 4/14/22 without the 475(f) MTM election statement. 

My question: where then would I mail the 475(f) MTM election statement to? specifically what address ? Is it the Same address I would mail my 1040 return to?

Also , do I need to mail a copy of my 1040 return with the statement even though I just e-filed on 4/14/22? 

@VictoriaD75 

[GeorgeM777]

Yes, the election statement is usually attached to the taxpayer's return, but in your case because you have already e-filed your return, then send the statement to the same address that you sent your return.   To be safe, attach your statement to your return, the same return you previously e-filed.  

The statement must describe the election being made, the first taxable year for which the election is effective (which it appears for you will be 2022), and, in the case of an election under § 475(f), the trade or business for which the election is made. 

Use of mark-to-market accounting under § 475(e) or (f) is a method of accounting. Generally, a taxpayer must obtain the consent of the Commissioner to change a method of accounting for federal income tax purposes. To obtain this consent, a Form 3115, Application for Change in Accounting Method, generally must be filed during the taxable year in which the taxpayer desires to make the change in method of accounting.  Non-filing of Form 3115 won't invalidate a timely and valid election; however, to be safe, file Form 3115 during 2022.  

@olio1987

[olio1987]

Thank you for the response !

so the form 3115 I would send with my 2022 tax return that I file in 2023 right ?

@GeorgeM777 

[dadall]

You stated that TurboTax does not support the MTM process.  I assume you mean only the process to register or apply.  Upon being approved, will I be able to file using TurboTax software (electronically)?  If yes, will the online software have all forms needed within it?

[fanfare]

MTM filing requirement is not supported by TurboTax directly.

You can prepare the Form 4797 In TurboTax Deluxe CD./Download, if you know how to do it, but you have to attach details of all transactions, so you must file on paper.

Besides that, you may want a CPA to figure and write up your deductible expenses for you.

[dadall]

It seems like it will be too tedious for me.  I probably will wait to have someone who's a CPA or similar.   Thanks!  

[Mike9241]

unless you are sure you qualify for trader status, you probably should consult a tax pro in advance. I would recommend it before the end of 2022. whether you qualify for the election or not would probably affect your trading strategy and certain rules have to be complied with which would come into effect at the beginning of the year for which the election goes into effect.