Actionable tax planning for U.S. individual taxpayers, day traders, freelancers, rideshare drivers, creators, and platform workers
Key Takeaways
- Excess Business Loss (EBL) limits: For TY 2025, losses over $313,000 (single) / $626,000 (MFJ) are disallowed and carried forward as NOLs. The new law makes the EBL regime permanent and amounts remain inflation-indexed.
- QBI (§199A) + traders/gig workers: The 20% QBI deduction is now permanent under the new law. Trading is an SSTB, so high-income traders may be phased out; lower-income traders and most gig workers (non-SSTB) may still qualify.
- 1099 reporting & records: For 2024, platforms issue 1099-K at $5,000; the new law restores $20,000 & 200 transactions in future years. 1099-NEC/MISC thresholds for many payers rise beginning 2026; e-file rules apply when you issue 10+ information returns.
- Mileage & logs: 2025 standard business mileage rate is 70¢/mile. Keep contemporaneous logs and digital receipts to defend deductions.
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1) Excess Business Loss (EBL) limits in 2025
What counts as an “excess” loss?
Your total business deductions (Schedule C, Schedule E/K-1 passthroughs, and certain Form 4797 items) minus business income are compared to the annual threshold. For 2025 the threshold is $313,000 (single) / $626,000 (MFJ). Any loss above that becomes a disallowed EBL for the year.
What happens to the excess?
- It converts to a net operating loss (NOL) carryforward.
- Post-2017 NOLs used in years after 2020 generally offset up to 80% of taxable income (before the NOL/QBI), with no regular carryback (farmers excepted).
- The new law permanently keeps the EBL regime in place, so build multi-year models.
Who’s affected? Day traders with large §475(f) ordinary losses, startup creators with heavy first-year expenses, and multi-platform gig workers aggregating losses across activities.
2) QBI deduction: who qualifies, SSTB rules, and trader specifics
Basics for gig workers & sole proprietors
- QBI can provide up to a 20% deduction on net qualified business income from Schedule C and passthroughs (S-corp/partnership K-1), subject to taxable-income, wage, and property limits.
- Most gig businesses (rideshare, delivery, design, content creation) are not SSTBs and qualify based on income level.
Traders (TTS) & §475(f)
- Trading is an SSTB. At high incomes, the QBI deduction phases out to zero; at lower incomes, some or all may still qualify.
- Without a §475(f) election, trading gains are usually capital and excluded from QBI; only business expenses on Schedule C count (often producing negative QBI).
- With a valid §475(f) mark-to-market election, trading gains/losses are generally ordinary (reported on Form 4797) and can produce positive QBI if you’re under the SSTB income limits.
- §475(f) also avoids wash-sale rules on trading positions held in the business.
Planning pivot: Model “with and without §475(f)”—the EBL cap, SSTB phaseouts, and wage/UBIA limits can change the optimal path.
3) How EBL, NOLs, and QBI interact
- Order matters. EBL is computed at the individual level after netting business items. The disallowed amount becomes an NOL carryforward.
- QBI impacts: QBI is computed using business income allowed in the year. Disallowed EBL shifting into future years can change future QBI and the 80% NOL limit can affect how much taxable income remains for the QBI calculation.
- Trader twist: A big §475(f) loss may be trapped by EBL in Year 1 (becomes NOL) and then offsets future ordinary income subject to the 80% cap—potentially reducing or eliminating QBI room in those future years. Run multi-year scenarios.
4) Record-keeping checklist for traders & gig workers
For traders
- Maintain evidence for Trader Tax Status (substantial, regular, continuous trading for profit).
- Keep the §475(f) election statement and timing proof; track Form 4797 details and year-end mark-to-market entries.
- Retain brokerage statements, trade logs, platform exports, and expense receipts (data, software, education that qualifies, equipment).
For gig workers
- Store 1099-NEC/1099-K and all income reports (even if no 1099 issued).
- Digitize receipts for supplies, platform fees, cell/data, insurance, and advertising. Separate personal vs. business spend.
- Keep mileage logs (app + odometer snapshots) and home-office measurements/photos.
Retention
- Generally keep tax records at least 3 years after filing; 6 years if substantial under-reporting; employment tax records 4 years.
- Use cloud backups and export CSV/PDF from platforms each quarter.
5) 1099-K / 1099-NEC / 1099-MISC: thresholds & e-file tips
- 1099-K (platform payments): For 2024 activity, platforms issue forms at $5,000. New law restores the classic $20,000 + 200 transactions standard for future years—watch for platform communications. You must still report all taxable income even with no form.
- 1099-NEC: Nonemployee compensation remains $600 for 2025; starting in 2026, the threshold increases to $2,000 under the new law. 1099-MISC thresholds adjust similarly for many categories.
- E-file rule: If you issue 10+ information returns in a year, you must e-file.
6) Mileage, home office, & common deductions
Mileage (2025)
- Standard business rate: 70¢/mile. Keep start/end odometer or a credible digital log.
- Park fees, tolls, and business parking are separately deductible.
Home office & supplies
- Home office: exclusive & regular use. Use simplified method (sq-ft) or actual-expense allocation.
- Subscriptions, software, phones, equipment (consider §179/bonus rules), and platform fees are ordinary and necessary if tied to the business.
7) Quarterly estimates & safe harbors
- 2025 due dates (calendar year): Apr 15, Jun 16, Sep 15, and Jan 15, 2026 (skip Jan 15 if you file by Jan 31 and pay in full).
- Avoid penalties by paying the lesser of 90% of current-year tax or 100% of prior-year tax (110% if last year’s AGI > $150k MFJ / $75k MFS).
- Uneven income? Use the annualized installment method on Form 2210 to match payments to income spikes.
8) Worked examples
| Scenario | Model this | Potential outcome |
|---|---|---|
| TTS trader, big losing year | Loss exceeds EBL cap → excess converts to NOL; plan next-year income, remember 80% NOL limit. | Cash loss now, tax benefit later. Consider whether §475(f) or capital treatment better fits future income/EBL dynamics. |
| Designer with mixed 1099-NEC & 1099-K | Combine on Schedule C, track QBI eligibility, capture mileage/home-office, and reconcile platform fees. | Lower AGI + QBI deduction; accurate records prevent 1099-K over-reporting from inflating income. |
| Lower-income trader uses §475(f) | Ordinary gains create positive QBI; verify SSTB thresholds to keep the 20% deduction. | QBI deduction increases after-tax return; watch EBL in down years to avoid surprises. |
| Multi-platform driver/creator | Quarterly estimates via safe harbor; mileage logs; separate bank account; e-file 1099s if you pay contractors (10+ rule). | Penalty-free cash flow, audit-ready records, maximized deductions. |
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9) FAQs
Do traders pay self-employment tax on trading profits?
No. Even with Trader Tax Status, trading gains aren’t subject to SE tax. Only bona fide Schedule C service income (consulting, etc.) would be.
Is a §475(f) election reversible?
Generally, it’s a method change with strict timing; late elections are rarely allowed. Get professional help before filing the election.
My platform didn’t send a 1099—do I still report income?
Yes. All taxable income is reportable whether or not a form was issued.
This U.S. tax guide is informational and not tax, legal, or financial advice. Rules change by statute and IRS guidance. Work with a qualified professional to model your facts before filing.
