Understanding Investment Tax Forms

Form 1099-DIV – Dividends and Distributions

What it reports: This form reports dividend income and capital gains distributions from stocks, mutual funds, and ETFs.

Key Boxes:

• Box 1a: Total ordinary dividends
• Box 1b: Qualified dividends (taxed at lower rates)
• Box 2a: Total capital gains distributions

Why it matters: Dividends and capital gains are taxable, and whether they are qualified or not affects the tax rate (qualified dividends are taxed at a lower capital gains rate).

Form 1099-INT – Interest Income

What it reports: Interest earned from bank accounts, bonds, and other interest-bearing investments.

Key Boxes:

• Box 1: Interest income
• Box 2: Early withdrawal penalties
• Box 3: Interest on U.S. Savings Bonds and Treasury securities

Why it matters: All interest income is generally taxable at your ordinary income tax rate, unless from tax-exempt securities (which may appear on 1099-INT as well).

Form 1099-B – Proceeds from Broker and Barter Exchange Transactions

What it reports: Sales of stocks, bonds, mutual funds, ETFs, and other capital assets.

Key Information:

• Date acquired and sold
• Cost basis
• Gain or loss
• Whether the gain/loss is short-term or long-term

Why it matters: You must report capital gains or losses on your tax return (Schedule D and Form 8949). Your holding period determines the tax rate.

Form 1099-OID – Original Issue Discount

What it reports: Interest from certain debt instruments (like zero-coupon bonds) where the interest isn’t paid until maturity but accrues each year.

Why it matters: You're required to pay taxes on this interest annually, even if you don’t receive the payment until a future date.

Form 1099-R – Distributions from Pensions, IRAs, Annuities

What it reports: Withdrawals from retirement accounts such as traditional IRAs, 401(k)s, pensions, and annuities.

Key Boxes:

• Box 1: Gross distribution
• Box 2a: Taxable amount
• Box 7: Distribution code (indicates early withdrawal, rollover, etc.)

Why it matters: These distributions are generally taxable, and early withdrawals may incur penalties.

Form 1099-Q – Distributions from Qualified Education Programs (529 Plans)

What it reports: Withdrawals from 529 college savings plans or Coverdell ESAs.

Why it matters: Distributions used for qualified education expenses are tax-free. Non-qualified distributions may be partially taxable and penalized.

Form 1099-SA – Distributions from HSAs, Archer MSAs

What it reports: Withdrawals from health savings accounts (HSAs) or medical savings accounts.

Why it matters: Qualified medical expenses are tax-free. Non-qualified withdrawals are taxable and may incur penalties.

Form K-1 (Schedule K-1) – Partnerships, S Corporations, Trusts

What it reports: Your share of income, deductions, and credits from investments in partnerships, S corporations, or trusts.

Why it matters: Often issued later in the tax season. You must report this income on your personal return, even if no cash was distributed.

Form 5498 – IRA Contributions

What it reports: Contributions made to IRAs, including traditional, Roth, SEP, and SIMPLE IRAs.

Why it matters: Form 5498 is for informational purposes and isn’t needed to file your taxes, but it’s useful for tracking contributions and rollovers.

Form 8937 – Organizational Actions Affecting Basis

What it reports: Corporate actions (like mergers, stock splits, or return of capital) that affect the basis of your investments.

Why it matters: Adjusting your cost basis properly is critical for accurately reporting gains or losses when you sell.