Your prop payouts get a 1099-NEC, not a 1099-B. That means federal income tax PLUS 15.3% self-employment tax. Get a ballpark of what you might owe — and what an S-Corp could typically save.
The 15.3% rate this calculator applies — 12.4% Social Security up to the annual wage base plus 2.9% Medicare with no cap — is the IRS's, published on its Self-Employment Tax (Social Security and Medicare Taxes) page. The wage base is re-indexed every year, so the current figure is typically worth checking there.
Disclaimer: Estimates only. Uses 2024/2025 federal SE tax rates and a flat ordinary bracket for simplicity. Actual tax depends on your full income picture, deductions, and filing status. Consult a licensed tax professional.
Whether a 1099 arrives changes your records, not your liability — US taxpayers report prop payouts either way. It matters because a firm that issues nothing leaves you reconciling wires and bank statements at filing time. Each firm guide below is the source of truth for its own row.
| Firm | Typically issues a 1099? | Guide |
|---|---|---|
| TopStep | Yes — 1099-NEC, no withholding | TopStep taxes |
| Apex Trader Funding | Yes — to US traders above the threshold | Apex taxes |
| MyFundedFutures | Typically yes — 1099-NEC | MFF taxes |
| Tradeify | Yes — above the threshold | Tradeify taxes |
| Take Profit Trader | Typically yes — 1099-NEC | TPT taxes |
| Earn2Trade | Yes — routes via a US brokerage partner | Earn2Trade taxes |
| Alpha Futures | Yes — above the threshold | Alpha Futures taxes |
| Bulenox | Yes — above the threshold | Bulenox taxes |
| TradeDay | Yes — above the threshold | TradeDay taxes |
| Lucid Trading | Typically not — self-reported | Lucid taxes |
| FTMO | Typically not — self-reported | FTMO taxes |
| OneUp Trader | Not publicly verified — ask the firm | OneUp Trader taxes |
| FundedNext Futures | Not publicly verified — ask the firm | FundedNext Futures taxes |
| Top One Futures | Not publicly verified — ask the firm | Top One Futures taxes |
The US reporting threshold rose from $600 to $2,000 for tax year 2026 under OBBBA, so smaller payouts from US firms may now arrive with no form attached where they previously generated one. Full detail on the reporting side: prop firm 1099-NEC guide. Firms not listed here are covered from the prop firm taxes hub.
It models: federal income tax at the bracket you select, self-employment tax (15.3% on 92.35% of net earnings, with the Social Security portion capped at the 2026 wage base of $184,500), a flat state rate, and the deductions you enter.
It does not model: what reasonable compensation is actually defensible for you, graduated federal brackets or your true marginal rate, state-specific rules and local tax, the QBI deduction, retirement-plan contributions, health-insurance treatment through an entity, credits, prior-year loss carryforwards, or filing status. The S-Corp figure illustrates the employment/payroll-tax difference and is not a guarantee of total savings. Treat every number here as a ballpark for a conversation with a CPA, not a filing position.
Because prop payouts are typically self-employment income rather than capital gains, ordinary and necessary business expenses generally come off the top — reducing income tax and self-employment tax. That makes tracking them unusually valuable here. Commonly deducted:
What qualifies depends on facts, and documentation is what makes a deduction survive scrutiny. Fuller list: evaluation fee deductions and trader tax deductions. Because nothing is withheld from a prop payout, most traders in this position also look at quarterly estimated payments to avoid underpayment penalties.
Apex, TopStep, FTMO, Tradeify, Take Profit, and similar firms report your payouts on Form 1099-NEC as self-employment income. You owe federal income tax at your ordinary rate, plus 15.3% self-employment tax on 92.35% of your net profit, plus state tax. Deductible expenses reduce both.
Yes — the full 15.3% SE tax (12.4% Social Security up to the wage base, plus 2.9% Medicare with no cap), on top of regular federal income tax. This is the single biggest tax difference between prop trading and personal-account stock trading.
Often yes. An S-Corp lets you split prop payouts between a reasonable W-2 salary (subject to payroll tax) and S-Corp distributions (not subject to SE tax). For traders earning $80K+ in payouts the modeled saving commonly falls in the $5,000–$15,000 range, though it is bounded — above the Social Security wage base only the 2.9% Medicare portion is still in play. The election goes on Form 2553. The salary split this tool models (half of net, capped at $80,000) is an illustrative assumption, not an IRS rule or safe harbor; reasonable compensation is facts-and-circumstances and a CPA sets it.
Generally yes, once your trading business is underway. Evaluation fees, reset fees, monthly data subscriptions, charting platform fees (NinjaTrader, Tradovate, ATAS), trade journals and a portion of home office expenses are typically ordinary and necessary business expenses under IRC §162 against prop firm self-employment income, including attempts you failed. The case that differs: a trader who has never been funded and has no payout history, where the same fees may instead be start-up expenditures under §195 — or not deductible at all if the activity is not engaged in for profit under §183. Full breakdown by fee type →
No. US citizens and residents owe US federal income tax and SE tax on payouts regardless of where the firm is based. International firms typically don't issue a 1099, but the income is still required to be reported. The lack of a 1099 doesn't change what you owe — it changes what records typically matter.