If you have sold stocks, bonds, or other securities through a broker, or participated in barter exchanges, then you may come across IRS Form 1099-B around tax season. It is part of your investment gain or loss reporting to the Internal Revenue Service (IRS). Here is everything you should know about the form including what it is, who needs it, how to fill it in, and where to apply.
What is IRS Form 1099-B?
The IRS Form 1099-B also known as “Proceeds from Broker and Barter Exchange Transactions” is a document that reports the sale or exchange of securities such as stocks and bonds and barter transactions. This form is provided by brokers or barter exchanges, both to the IRS as well as to the participants of the transaction.
- The details of the form include:
- Description of securities sold or exchanged
- The date on which you acquired and sold the securities
- The cost basis and proceeds of the sale
- Any gain or loss therefore
Tax return preparation is made very easy because the IRS has a record for you in terms of taxable transactions.
Who needs to file Form 1099-B?
Not all individuals are required to file Form 1099-B. The requirement to file Form 1099-B falls on:
- Brokers: A broker must declare securities if it sells them for a client on its own behalf or for someone else and file the appropriate Form 1099-B.
- Barter exchanges: The value of any trade between two members needs to be reported by organizations that facilitate exchanges of goods or services between their members.
As an individual, you do not file Form 1099-B yourself. Rather, you receive it from your broker or barter exchange and use it to complete your return.
How to fill out IRS Form 1099-B
If you are responsible for filing Form 1099-B, here is a step-by-step guide:
- Enter the payer details: Provide your name, address, and taxpayer identification number (TIN).
- Add the recipient details: Include the recipient’s name, address, and TIN.
- Describe the property: Mention the type of security or barter transaction, such as stocks, bonds, or exchanged goods.
- Include the dates: List the acquisition date and sale or exchange date of the securities.
- Report the proceeds: Record the gross proceeds from the transaction.
- Provide the cost basis: Enter the original purchase price of the securities or goods.
- Indicate any adjustments: Include wash sale loss disallowed or accrued market discounts if applicable.
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Where to submit Form 1099-B
Depending on how you choose to file, here is where you need to send Form 1099-B:
- Electronic filing: The IRS strongly encourages e-filing, which is faster, more secure, and reduces the chance of errors. Services like TaxZerone can help streamline the process.
- Paper filing: If you prefer to file by mail, you must use official red-ink copies of Form 1099-B. These can be mailed to the appropriate IRS address based on your location (check the IRS website for details).
Be sure to provide a copy of the form to the recipient by February 15, 2025, and file with the IRS by February 28, 2025 (for paper forms) or March 31, 2025 (for electronic submissions).
What happens if you miss the deadline?
Failing to submit Form 1099-B on time can lead to IRS penalties. Here is a quick breakdown:
- Up to 30 days late: $60 per form
- 31 days late through August 1: $130 per form
- After August 1 or never filed: $330 per form
- Intentional disregard: $660 per form
To avoid these penalties, make sure to plan ahead and file accurately before the deadline.
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Tips for individuals receiving Form 1099-B
This is what to do when you receive a Form 1099-B:
- Review the forms carefully. Verify that all the details match your own records.
- Use the form to prepare your tax return, especially Schedule D (Capital Gains and Losses) and Form 8949 (Sales and Other Dispositions of Capital Assets).
- Retain a copy for your records, it may be necessary in the future.
