Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, is used to report gains and losses from brokerages and barter exchanges for tax purposes. Individual taxpayers receive this form filled out by their brokers or barter exchange and then use the details to complete Form 8949, which helps to calculate preliminary gains and losses. The results are eventually reported on Schedule D of the tax return.
Key Takeaways
- Form 1099-B is issued by brokers for tax reporting purposes.
- It lists all transactions made during a tax year.
- The form’s details help in completing Schedule D for listing gains and losses.
- The sum total reported is the taxable gain or loss for the year.
- Brokers and barter exchanges must file distinct forms for different securities even if they occurred in a single transaction.
Who Must File Form 1099-B?
Brokers send a 1099-B form to both the IRS and their customers who sold stocks, options, commodities, or other securities within a year. This form records the taxpayer’s gains or losses. Including figures from selling stocks like $10,000 can translate into a taxable capital gain reported by both the brokerage and the taxpayer.
Similarly, companies involved in bartering activities fill out the form for changes in capital structure or control related to a corporation in which stock is held. If you don’t receive your copy by February 15, contact the issuer for a replacement.
Filing Form 1099-B
Brokerages or barter exchanges need to file a separate Form 1099-B for each transaction involving the sale of securities or similar financial instruments. Information on the form includes the issuer’s and taxpayer’s details, descriptions of each investment, purchase and sale dates and prices, and the resulting gain or loss. Importantly, transaction commissions are excluded.
Taxpayers offset capital losses against capital gains to reduce taxable income. While there are annual limits on deductible capital losses, any excess can be carried over to future tax years.
Reporting Gains and Losses
Form 1099-B reports cash received, the fair market value of goods or services, or trade credits from bartering. Taxpayers may need to report gains from such activities in forms including cash, property, or stock.
How to Utilize Form 1099-B on Your Tax Return
To complete your tax filing, transfer information from Form 1099-B to Form 8949, which is then used to summarize gains and losses on Schedule D. Remember, you don’t submit the 1099-B itself but ensure the information on it is represented on your tax documents.
Essential Forms Related to Form 1099-B
Several important forms are linked with Form 1099-B:
- Schedule D: Used to record the yearly gains and losses.
- Form 8949: Records the details of every transaction.
Frequently Asked Questions
What Is Form 1099-B Used For?
Form 1099-B is utilized to report the capital gains and losses incurred by taxpayers through broker transactions and barter exchanges.
How Do You Report 1099-B on Your Tax Return?
Transfer the information from Form 1099-B to Schedule D and Form 8949, reporting capital gains or losses.
How Do You Read Form 1099-B?
It includes both issuer’s and your data, describing sold property, acquisition and sale dates and prices, together with any applicable deductions.
Do I Have to Report 1099-B on My Taxes?
While you don’t send Form 1099-B itself to the IRS, the info must be included on Form 8949 and subsequently reported on Schedule D.
Is 1099-B Earned Income?
No, 1099-B reports capital gains and losses, not earned income from employment.
The Bottom Line
Form 1099-B is essential for reporting annual capital gains and losses. Taxpayers use it to populate Form 8949, with results presented on Schedule D. Proper reporting helps ensure compliance and accurate tax calculations.
References
- Internal Revenue Service. “About Form 1099-B, Proceeds from Broker and Barter Exchange Transactions”.
- Internal Revenue Service. “General Instructions for Certain Information Returns: (Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, and W-2G)”, Page 26.
- Internal Revenue Service. “Form 1099-B, Proceeds from Broker and Barter Exchange Transactions”, Pages 4-5.
- Internal Revenue Service. “Topic No. 409, Capital Gains and Losses”.
- Internal Revenue Service. “Form 1099-B, Proceeds from Broker and Barter Exchange Transactions”, Page 5.
- Internal Revenue Service. “Instructions for Form 1099-B, Proceeds From Broker and Barter Exchange Transactions”, Page 7.
- Internal Revenue Service. “Instructions for Form 1099-B, Proceeds From Broker and Barter Exchange Transactions”, Pages 7-8.
- Internal Revenue Service. “About Schedule D (Form 1040), Capital Gains and Losses”.
- Internal Revenue Service. “About Form 8949, Sales and Other Dispositions of Capital Assets”.
- Internal Revenue Service. “Form 1099-B, Proceeds from Broker and Barter Exchange Transactions”, Pages 4-5, 7.
