Tax Tips

Tax Tip

Overview

Form 1099-B is used to report proceeds from stock transactions.
Form 1099-DIV is used to report dividend and capital gain income from stocks and mutual funds.
Form 1099-INT is used to report interest income received.
Form 1099-MISC is used to report many types of income such as rents, royalties and non-employee compensation.

The different types of Form 1099 are used to report anything from interest you receive on a savings account to money you may receive when you perform contract jobs as a self-employed individual. You should receive your 1099 forms by Jan. 31, like your W-2s.

The IRS requires certain information be reported for each specific 1099 on your tax return, but the format is not standardized.

Form 1099-B

Form 1099-B is used to report proceeds from stock transactions. The stock transactions are reported on Schedule D on your tax return. Any Form 1099-B you receive may report a single transaction or multiple transactions if you have an account at a brokerage or mutual fund company. The following information shown on Form 1099-B is needed when preparing your return:

Date of sale: This is the date the transaction took place and is used as the sales date on your Schedule D.
Stocks, bonds, etc.: This is the amount of money you received on the sale of your stock (usually less commissions) and is reported as the sales price on your Schedule D.
Description: This is a brief description of the asset sold and is entered on your Schedule D.

In addition, some firms provide information about the cost basis of the asset sold. This information may be used on Schedule D. Otherwise, you're responsible for computing your cost basis.

Form 1099-DIV

Form 1099-DIV is used to report dividend and capital gain income from stocks and mutual funds. The following information shown on Form 1099-DIV is needed or may be used when preparing your return:

Ordinary dividends: This amount is entered directly on Form 1040 or on Schedule B (if required) and is completely taxable.
Capital gain distributions: This amount is entered directly on Form 1040 or Schedule D (if required) and may be eligible for a lower tax rate. There are several classes of capital gains that are eligible for different rates.
Foreign tax paid: This amount is taxes paid to a foreign government on international investments. You may claim a credit or itemized deduction for this amount, whichever is most advantageous. Check with a tax professional.

Form 1099-INT

Form 1099-INT is used to report interest income received. The following information shown on Form 1099-INT is needed when preparing your tax return:

Interest income: This amount is entered directly on Form 1040 or on Schedule B (if required) and is completely taxable.
Early withdrawal penalty: This amount is charged when a time investment, such as a CD, is withdrawn early. This amount may be used as an adjustment to income on line 33 of Form 1040.
Interest on U.S. savings bonds and treasury obligations: This interest is reported on Form 1040 or Schedule B (if required) and is generally taxable on your federal return but not taxable on your state return.

Form 1099-MISC

Form 1099-MISC is used to report many types of income. The main types — rents, royalties and non-employee compensation — generally require the use of additional forms on your tax return.

(Box 1) Rents: Any amount of rental income you receive is entered and reported on Schedule E.
(Box 2) Royalties: Income you receive for the use of property you own or work you created is entered here. This income may need to be reported on either Schedule C or E. Consult with a tax professional for assistance in determining how to report this income.
(Box 7) Non-employee compensation: Income you receive as contract labor or self-employment income is reported in this box. Generally you must report this income on Schedule C and pay self-employment tax on the net profit.

People Who Read This Also Read

Frequently Asked Questions

Question: Two of the 1099-DIVs I received from my brokers this year have an entry in the foreign tax box. What do I do with them?
Answer: You can choose to take a credit or an itemized deduction for foreign taxes paid on your income tax return. Typically, the credit is better because it reduces your income tax dollar for dollar. You can claim the credit by completing Form 1116. Alternatively, you generally can elect a simplified method for any year the total foreign tax is not more than $300 ($600 Married Filing Jointly) and it's all reported on Form 1099-INT, Form 1099-DIV or Schedule K-1. In this case, Form 1116 is not required; you claim the foreign tax directly on the credit line of Form 1040.

Question: I've cashed in some of my mutual funds and have received a Form 1099-B. How do I report the sale on my Schedule D?
Answer: Form 1099-B reports the proceeds of your sale of your mutual fund shares to the IRS. Use Schedule D to report the sales. The sale of shares you held 1 year or less result in long-term gains or losses. The sale of shares held more than 1 year result in long-term gains and losses. Don't forget to include in the basis of the shares sold and any dividends you reinvested in additional shares.

Question: On what form do I report income shown on Form 1099-MISC?
Answer: Income reported in Box 7 is entered on Schedule C or C-EZ. Income reported in Box 3 is entered on line 21, Form 1040. See the instructions on the back of the 1099 if it shows income in 1 of the other boxes.

More Investment FAQs
More Self-employment FAQs

Related IRS Forms & Publications