• Investing & Markets

Tax Forms Every Investor Should Know

March 27, 2018 | Brian Wainscoat, CPA

Tax forms and filings may not be as complicated as you think; oftentimes, the more you learn about what each form is for, the easier the entire process gets.

Taking just a few minutes to understand what some of the most common investor tax forms are for can get you off to a great start this tax season.

Primary Reasons Investors Receive Tax Forms

What does the government want to know about your investment portfolios and assets? It’s pretty straightforward. Some of the most common events that need to be reported include:

  • Capital gains and losses (e.g., selling investments)
  • Dividends (e.g., cash dividend income received on investments)
  • Interest income (e.g., money market, savings, bond and CD interest received)
  • Distributions (e.g., from retirement, profit sharing, and HSA plans)
  • Royalties, rents, and other non-employee compensation (e.g., rental property income and contracting work)
  • Real estate sales (e.g., selling your home)
  • Interest paid (e.g., investment interest, home mortgage and student loan interest)

Common Tax Forms For Investors

So just how does all of this information get reported to the IRS? Typically upon the completion of each calendar year, banks, brokers and other institutions generate tax forms that report relevant events that occurred during the prior year.

Many of these forms are commonly known as 1099 tax forms. There are several different variations of 1099 forms depending on the type of event that took place as well as the associated account type. Firms submit one copy of each form to the IRS and another copy to each account holder.

Here are some of the most common 1099 forms that investors often receive:

NAME EVENT DETAILS
1099-B Capital gains or losses from trades of publicly traded securities (e.g., stocks & ETFs)/td> The “B” stands for broker or barter exchange. This form includes details such as short-term versus long-term gains or losses, as well as other important
transaction information, including your cost basis, date of sale, ticker symbol,
quantity sold, gross proceeds, and federal tax withheld.
1099-DIV Dividend payments and other distributions This form reports mutual funds. If you held any foreign securities domiciled outside the United States, any foreign taxes you paid are reported on this form. It also reports ordinary dividends separately from qualified dividends, and specifies if you had any state or federal taxes withheld from your distributions.
1099-INT Interest income Banks, savings institutions, and brokerage firms typically generate these forms when you receive interest payments in your accounts. Common account types that receive interest income include checking, savings, money market, CDs, U.S. savings bonds, and investment accounts holding interest bearing securities.
1099-MISC Miscellaneous income This form is used to report various types of non-employee compensation. Examples include money earned as an independent contractor, royalty income, prize monies, awards, and rental property income.
1099-OID Original issue discount If you purchased a bond or note for an amount less than face value last year, you could receive this form. It reports when the redemption price or face value of your investment was higher than its issue price. Some examples include income from zero-coupon bonds, T-bills, or peer-to-peer lending.
1099-R Distributions from qualified plans You could receive this form if you had distributions from retirement plans, profit-sharing plans, annuities, pensions, insurance contracts, and disability payments. You should receive a separate 1099-R for each account and distribution code. If you rolled over an employer-sponsored plan into an IRA, you should also expect to receive Form 5498, which should balance out the distribution reported on your 1099-R.
1099-Consolidated One account with multiple events in one year A 1099 Consolidated takes multiple 1099 forms and compiles them all together into one file. For example, a consolidated 1099 statement could include 1099-DIV, 1099-INT, 1099-B, and 1099-OID combined in one form.

This table breaks down common tax forms for investors. They are typically due to be postmarked and filed with the IRS, between January 31 and February 15.

If your 1099 forms never came, don’t worry. Unlike W-2s, they aren’t required to be filed with your return (except for 1099-R if you had federal tax withheld) so if you know how much you earned, simply report the relevant income when you file. If you’re unsure how much you need to report or want to get an official copy for your records, contact the sender and request a duplicate tax form for your records.

Our Take

Plan on collecting all your forms in one place so you can quickly reference them when it comes time to sit down and prepare your tax return. The less time you have to spend hunting down forms and completing your return, the happier you’ll likely be. If filing your own tax return seems too burdensome, don’t worry – you can seek out a qualified tax professional who can make sense of all of your forms and prepare them for you.

To learn more about tax forms and how they fit into your overall strategy, download our free Personal Capital’s Tax Guide.

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Please note that this list of tax forms is not intended to be comprehensive and should not be taken as a recommendation to file in any specific way. This blog is for informational purposes only and is intended to offer guidance; not specific legal or tax advice. Clients are advised to consult their CPA before taking action based on this advice.

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