PayoutTaxTopstep taxes and your 1099-NEC
Updated November 6, 2026 · For the 2026 tax year
Topstep sends US citizens a Form 1099-NEC for their payouts by email. It sent the 2025 forms on January 31, 2026. Topstep traders are independent contractors, so nothing is withheld from a payout and the tax is yours to plan for before that email arrives.
PayoutTax isn't affiliated with Topstep. The Topstep details below come from its help article Funded Trader Tax Questions, read on November 6, 2026. Check that page for changes.
Who gets a Topstep 1099-NEC
- US citizens over the threshold. For 2025, Topstep emailed a 1099-NEC to US citizens who received over $600 in payouts. If you qualify and can't find it, Topstep says to check your spam folder.
- No form for everyone else. US citizens under $600 and non-US citizens get no form from Topstep. If you live outside the US, Topstep says to follow your own country's rules and ask a local professional.
- Questions about the form go to 1099support@topstep.com.
The page describes the 2025 forms and doesn't say what Topstep will use for 2026 payouts. For payments made in 2026, the IRS threshold for a 1099-NEC is generally $2,000, but the threshold doesn't change what's taxable. A payout with no form is still income.
Which tax form you fill out
Topstep collects a W-9 from US citizens, wherever they live. A resident alien with an ITIN also uses a W-9 and puts the ITIN in the SSN field. A non-US citizen living outside the US fills out a W-8 BEN.
Funded accounts have to be in your own legal name. A US single-member LLC can receive payouts and file taxes under the LLC: Topstep says to use your personal details on the Funded Account Agreement and the LLC's details on the bank and tax forms. C-corps, S-corps and multi-member LLCs aren't allowed. If you're weighing an LLC, see what an LLC does and doesn't change.
Why the 1099 looks higher than what you got
Topstep says the IRS requires it to report your gross payout, before fees. Its example is a $500 payout request with a $30 processing fee: the form shows $500 and you receive $470. Topstep says to deduct the $30 as a business expense on Schedule C. Payouts through Wise have no processing fee, so gross and net are the same.
Keep your own log of each payout and each fee so the form total is easy to check. Your other costs aren't on the form either. Evaluation fees, resets and activation fees are yours to track and raise with your tax preparer.
What to set aside before January
The form arrives after the year is over, but the tax is due during the year. As one example, a single filer in Texas with $70,000 of W-2 wages and one $5,000 payout in 2026, with no trading costs, would owe about $1,729 in federal tax on it, leaving about $3,271. The Texas guide shows that example in full. Your state, wages and costs will change the answer.
Two dates to know: the January 15, 2027 estimated payment covers the last part of 2026, and payouts go on Schedule C and Schedule SE when you file. The free calculator runs your own numbers with no sign-up. Confirm the final figures with a CPA.
Sources
- Topstep, Funded Trader Tax Questions: who gets a 1099-NEC, the 2025 send date, W-9 and W-8 BEN, gross payouts and fees, LLC rules, 1099 support email. Read November 6, 2026 (page dated May 29, 2026).
- IRS, Am I required to file a Form 1099 or other information return?: $2,000 threshold for 2026
- IRS, 2026 Form 1040-ES: self-employment worksheet and federal due dates
- PayoutTax 2026 tax tables: every figure the calculator used, each with its source
General information, not tax advice. This guide explains common rules for US funded traders; your situation may differ. It isn't a substitute for a licensed CPA or IRS enrolled agent, so review your own numbers with one before you file or pay.