Broker Check

What Investment Documents Do I Need For My Tax Return?

January 10, 2023

Tax season is upon us again! What documents should you be expecting related to your investment accounts? 

Your custodian will be providing tax documents that will assist you in preparing your tax returns beginning in late January. It's important to note that you may also receive what are known as “corrected” tax documents up to and after April 15th. The custodians are required to provide corrected tax documents when the IRS or Treasury Department directs a mutual fund or other security to change the reporting of tax information to accurately reflect the tax implications of dividends, interest, capital gains, or other tax related items. While these corrections can delay or cause re-filing of your returns, the custodians are not the cause of the changes in most cases. Make sure to provide all tax documents you receive to your tax preparer.

One of the most common tax documents you may receive is known as the Form 1099. This is a US government form that records specific tax data such as income, capital gain or loss, interest, dividends, foreign tax paid, or other data. There are several versions of the Form 1099 depending on the tax data type. Generally, one tax document should be issued annually for each of your accounts. Exceptions to this include IRA accounts where there were no contributions or withdrawals for the year, or Roth IRA accounts where no contributions, conversions, or withdrawals have occurred.

Some of the most common types of tax documents are listed below with a description of the data they provide to the IRS.  In many cases, where an account has more than one type of data to be reported, a “consolidated form 1099” may be issued with some combination of the 1099 information below. 

A 1099-DIV tax form is a record that a company or other entity paid you dividends. If you earned more than $10 in dividends from a company or other entity, you’ll receive a 1099-DIV.

A 1099-INT tax form is a record that a bank or other entity paid you interest.  If you earned more than $10 in interest from a bank, brokerage firm or other financial institution, you’ll receive a 1099-INT.

A 1099-Misc tax form reports miscellaneous tax detail such as royalties or payments in lieu of interest or dividends, and other income not reported elsewhere.

Form 8949 reports “summary of proceeds, gains and losses, adjustments and withholding” which is where capital gains or losses on the sale of securities are reported. This includes any tax withholding which should be applied to your tax return to reduce the amount of income tax you owe with your return. In some cases, the original cost of the securities you sold is not reported on your tax documents. If you or your tax preparer finds missing cost information, you should work with your custodian or investment professional to locate this information so you don't end up paying more tax than necessary.

If you have questions about how we support our clients throughout tax season, we would be happy to speak with you. We do not prepare tax returns or provide tax related advice.