Tax Reporting: What to do if you believe information on Form 1099 is incorrect

If your name, address, Taxpayer Identification Number or other information on a Form 1099 is inaccurate, send a correction request to Customer Service by logging in to Account Management and selecting Support to open the Mesage Center.  In the New Ticket selection box, use the drop down arrow to select Tax Correction Form and click Create.

If you are using the old Account Management layout, click the Message Center icon in the Customer Service area at the top left of the page. In the New Ticket selection box, use the drop down arrow to select Tax Correction Form and click Create.

In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this FAQ was not intended or written to be used and cannot be used for the purpose of avoiding tax penalties that may be imposed on any taxpayer.

 

 

Tax Reporting: What to do if your consolidated form 1099 is not posted in the Tax Forms section of Account Management

First, you must determine from which account you are missing your consolidated form 1099.  Retirement account and educational savings account 1099s are sent to you by mail, if applicable. If you are missing a consolidated form 1099, verify that you sold shares of stock during the previous tax year for equities or covered a short postition opened after 2010 or that you bought or sold futures contracts during that same period or that you received an interest (including interest on free cash) or dividend payment in an account. Once you have reviewed your account activity from the previous tax year, and, you have determined that you should have received a 1099 for an account, please contact our customer service department with specific details of transactions, including the name of the security, number of shares/contracts, and the trade date. We will research the issue and will advise you once we have concluded our investigation.

Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.

 

 

Tax Reporting: I am unable to log in to Account Management. How do I access my forms?

Contact our Customer Service Department, and advise the service agent you are unable to log in to Account Management.  If you have your username, we will verify your account information and customer service will create a temporary password in order for you to gain access.  If you do not have your username, you will be asked to provide additional information to our New Accounts department in order to verify the account.  Please be advised this may require additional processing time to complete the verification process.

Dividend Tax Rates

Übersicht: 

Virtually all countries apply withholding taxes when local companies seek to distribute dividends to externally based shareholders (whether those shareholders are corporate or not).  The rate at which IB is obligated to withhold for a given payment depends largely upon whether there is a tax treaty in place between the country where the dividend paying country is based and the country of residence of the dividend recipient.  .

The table below depicts certain the rates of withholding as applied by IB effective 6-1-2012.

 

Dividend Withholding Rates
  Jurisdiction #1         
Jurisdiction #2          Withholding Rate
  United States Australia 15.0%
  United States Austria 15.0%
  United States Bangladesh 15.0%
  United States Barbados 15.0%
  United States Belgium 15.0%
  United States Bulgaria 10.0%
  United States Canada 15.0%
  United States China 10.0%
  United States Cyprus 15.0%
  United States Czech Republic 15.0%
  United States Denmark 15.0%
  United States Egypt 15.0%
  United States Estonia 15.0%
  United States Finland 15.0%
  United States France 15.0%
  United States Germany 15.0%
  United States Hungary 15.0%
  United States Iceland 15.0%
  United States India 25.0%
  United States Indonesia 15.0%
  United States Ireland 15.0%
  United States Israel 25.0%
  United States Italy 15.0%
  United States Jamaica 15.0%
  United States Japan 10.0%
  United States Kazakhstan 15.0%
  United States Korea 15.0%
  United States Latvia 15.0%
  United States Lithuania 15.0%
  United States Luxembourg 15.0%
  United States Malta 15.0%
  United States Mexico 10.0%
  United States Morocco 15.0%
  United States Netherlands 15.0%
  United States New Zealand 15.0%
  United States Norway 15.0%
  United States Pakistan 30.0%
  United States Philippines 25.0%
  United States Poland 15.0%
  United States Portugal 15.0%
  United States Romania 10.0%
  United States Russia 10.0%
  United States Slovakia 15.0%
  United States Slovenia 15.0%
  United States South Africa 15.0%
  United States Spain 15.0%
  United States Sri Lanka 15.0%
  United States Sweden 15.0%
  United States Switzerland 15.0%
  United States Thailand 15.0%
  United States Trinidad and Tobago 25.0%
  United States Tunisia 20.0%
  United States Turkey 20.0%
  United States Ukraine 15.0%
  United States United Kingdom 15.0%
  United States Venezuela 15.0%
  Canada Algeria 15.0%
  Canada Argentina 15.0%
  Canada Armenia 15.0%
  Canada Australia 15.0%
  Canada Austria 15.0%
  Canada Azerbaijan 15.0%
  Canada Bangladesh 15.0%
  Canada Barbados 15.0%
  Canada Belgium 15.0%
  Canada Brazil 15.0%
  Canada Bulgaria 15.0%
  Canada Cameroon 15.0%
  Canada Chile 15.0%
  Canada China 15.0%
  Canada Croatia 15.0%
  Canada Cyprus 15.0%
  Canada Czech Republic 15.0%
  Canada Denmark 15.0%
  Canada Dominican Republic 18.0%
  Canada Dubai 15.0%
  Canada Ecuador 15.0%
  Canada Egypt 15.0%
  Canada Estonia 15.0%
  Canada Finland 15.0%
  Canada France 15.0%
  Canada Gabon 15.0%
  Canada Germany 15.0%
  Canada Guyana 15.0%
  Canada Hungary 15.0%
  Canada Iceland 15.0%
  Canada India 25.0%
  Canada Indonesia 15.0%
  Canada Ireland 15.0%
  Canada Israel 15.0%
  Canada Italy 15.0%
  Canada Ivory Coast 15.0%
  Canada Jamaica 15.0%
  Canada Japan 15.0%
  Canada Jordan 15.0%
  Canada Kazakhstan 15.0%
  Canada Kenya 25.0%
  Canada Korea 15.0%
  Canada Kuwait 15.0%
  Canada Kyrgyzstan 15.0%
  Canada Latvia 15.0%
  Canada Lithuania 15.0%
  Canada Luxembourg 15.0%
  Canada Malaysia 15.0%
  Canada Malta 15.0%
  Canada Mexico 15.0%
  Canada Moldova 15.0%
  Canada Mongolia 15.0%
  Canada Morocco 15.0%
  Canada Netherlands 15.0%
  Canada New Zealand 15.0%
  Canada Nigeria 15.0%
  Canada Norway 15.0%
  Canada Oman 15.0%
  Canada Pakistan 20.0%
  Canada Papua New Guinea 15.0%
  Canada Peru 15.0%
  Canada Philippines 15.0%
  Canada Poland 15.0%
  Canada Portugal 15.0%
  Canada Romania 15.0%
  Canada Russia 15.0%
  Canada Senegal 15.0%
  Canada Singapore 15.0%
  Canada Slovakia 15.0%
  Canada Slovenia 15.0%
  Canada South Africa 15.0%
  Canada Spain 15.0%
  Canada Sri Lanka 15.0%
  Canada Sweden 15.0%
  Canada Switzerland 15.0%
  Canada Tanzania 25.0%
  Canada Thailand 15.0%
  Canada Trinidad and Tobago 15.0%
  Canada Tunisia 15.0%
  Canada Turkey 20.0%
  Canada Ukraine 15.0%
  Canada United Kingdom 15.0%
  Canada United States 15.0%
  Canada Uzbekistan 15.0%
  Canada Venezuela 15.0%
  Canada Vietnam 15.0%
  Canada Zambia 15.0%
  Canada Zimbabwe 15.0%


Tax Reporting: How to Access Tax Forms

To access and print your Forms 1099, with the exception of Forms 1099-R and 5498, log in to old Account Management with your IB username and password, and select Tax Forms from the Report Management menu or log in to new Account Management and Click Reports > Tax Forms.

Your 1099-R and 5498, if applicable, will be sent to you directly by Principal Trust Company, the administrator of IB’s retirement accounts, via regular mail.   

IB recommends that you print your year-end statement, dividend report and Form 8949 worksheet for detail of information not reported to the IRS, but which may be necessary to prepare your federal income tax return.

In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this FAQ was not intended or written to be used and cannot be used for the purpose of avoiding tax penalties that may be imposed on any taxpayer.

 

Tax Reporting: Types of Forms 1099

IB issues a consolidated Form 1099 on or about February 15 annually. Therefore, if you have both a securities and commodities account you may receive 1099s, for each account. Your 1099 reports information such as interest earned, dividends received, payments in lieu, gross proceeds from securities/futures transactions and tax withholding.

If you are a U.S. citizen, green card holder, or legal resident, you will be provided with a consolidated Form 1099 which contains information provided in one or more of the Forms 1099 listed below based upon the activity which has taken place within your account over the calendar year:

Form 1099-INT (Interest Income) reports interest income earned in your account including cash balance interest. Box 1 contains interest income, exclusive of U.S. savings bond and U.S. Treasury obligations interest. Interest from U.S. savings bonds and US Treasury obligations is reported in Box 3. If the IRS has notified us that backup income tax must be withheld on interest income in your account, this amount will be reported in Box 4.

Margin interest paid by you is not reported to the IRS. This amount appears on your year-end statement. Please consult your tax advisor to determine the tax treatment of these payments.

Form 1099-DIV (Dividend Income) reports the total dividend payments credited to your securities account for the calendar year as "Ordinary Dividends" in Box 1a. Box 1b, "Qualified Dividends", are dividends, which are included in Box 1a that MAY be eligible for reduced tax rates. IB does not determine if the payments included in Box 1b have met the requirements for the lower tax rates to apply. IB only determines that they are payments which may be eligible for the lower tax rates. Please consult your tax advisor, see the Form 1040/1040A instructions, or IRS Publication 550 to determine the appropriate status of these payments. Box 2a “Total Capital Gain Distributions”, reports long-term capital gain distributions from mutual and exchange traded funds. Box 6, "Foreign Tax Withheld", is foreign withholding tax that has been withheld at the source related to dividends paid on American Depository Receipts (ADRs) or on foreign ordinary shares trading in the U.S. The country to which the tax was paid is listed in Box 7. If the IRS notified us that backup income tax must be withheld on dividends paid to your account, this amount is reported in Box 4.

Dividends that were debited due to short positions (payments in lieu) are not reported to the IRS. Payments in lieu of dividends paid to you are reported on Form 1099-MISC. These amounts also appear on your Annual statement. Please consult your tax advisor to determine the tax treatment of these payments.

Form 1099-Misc (Miscellaneous Income) reports stock loan fees received in Box 3.  Gross fee income paid to advisors and gross commissions paid to introducing brokers in Box 7. Box 8 reports substitute payments in lieu of dividends and interest. If we were notified by the IRS that back up withholding was required on your account, tax withheld is reported in Box 4.

Form 1099-OID (Original Issue Discount) reports the amortization of bond interest on discounted bonds which is taxable annually. OID is the excess of an obligation’s stated redemption price at maturity over its issue price. OID is taxable as interest over the life of the obligation. If you hold an OID obligation, generally you must include an amount of OID in your gross income each year you hold the obligation. Obligations that may have OID include bonds, debentures, notes, certificates and other evidence of indebtedness with terms of more than one year.

Box 1 contains the OID on obligations for the part of the year you owned them. Report the amount in Box 1 as interest income on Schedule B of your tax return. However, depending on the type of debt instrument, the issue or acquisition date, and other factors, you may have to figure the correct amount of OID to report on your return. See IRS Publication 1212, Guide to Original Issue Discount (OID) Instruments, for details on how to figure the correct OID. Box 2 contains other interest on OID obligations for the year, which is an amount separate from the OID. If you held the obligation the entire year, report this amount as interest income on Schedule B of your tax return. If you disposed of the obligation or acquired it from another holder during the year, see IRS Publication 550 for reporting instructions. Box 3 shows interest or principal forfeited if you withdrew the money before the maturity date of the obligation. If the IRS has notified us that backup income tax must be withheld on interest income in your account, this amount will be reported in Box 4. Box 6 shows OID on US Treasury obligations for the part of the year you owned them. Report this amount as interest income on your federal income tax return and see IRS Publication 1212 to figure any appropriate adjustments to this amount. Box 6 OID is exempt from state and local income taxes and is NOT included in Box 1.

Form 1099-B (Proceeds from Broker and Barter Exchange) reports proceeds from securities transactions including sales of stocks, bonds, short sales, redemptions, tenders and bond maturities. Additionally, profit and loss from futures is also reported on Form 1099-B.

For 2011, Form 1099-B has undergone significant changes as brokers are required to report acquisition date, cost, short-term or long-term holding period for gains and losses and disallowed wash sales for securities purchased on or after January 1, 2011 for "Covered Securities."

There are now four 1099-B forms included in the Consolidated Forms 1099:

  • Covered Securities with short-term gains or losses
  • Covered Securities with long-term gains or losses
  • Covered Securities - short sales with short term gains or losses
  • Noncovered Securities

All of the different forms 1099-B contain the same boxes, however not all of the boxes may be used on every form.

Box 1a reports the date of sale or exchange for the security. For short sales the date shown is the date the security was delivered to close the short sale.

Box 1b reports the date the security was acquired. For short sales reported is the date of acquisition for the security used to cover the short position. Box 1b will be blank for noncovered securities.

Box 2 reports gross proceeds, less commissions and fees, received from transactions involving sales and short sales of stocks and bonds, other debt obligations, commodities, forward contracts, mutual funds and other securities. This amount may be adjusted for certain related options positions.

Also included in proceeds is cash paid in lieu of fractional shares, received on a corporation's sale of fractional shares resulting from a corporate action (i.e., merger, spin/split-off or exchange). Refer to IRS Publication 550, Investment Income and Expenses, and consult your tax advisor for proper reporting of cash in lieu of fractional shares.

Box 3 reports cost or other basis of securities sold. This basis may be adjusted for certain wash sales, related options positions, and corporate actions. Box 3 will be blank for noncovered securities.

Box 4 is the amount of federal income tax withheld from the sale.

Box 5 shows the amount of nondeductible loss in a wash sale transaction. Only wash sales involving identical covered securities within a single account will be reported. Not all wash sales will be reported. For details on wash sales, see the 2011 Instructions for Schedule D (and Form 8949) Instructions and IRS Publication 550.

Box 8 shows whether the gain or loss is long-term or short-term.

IB does not report amounts for Box 10, 11 and 12.

Box 13 is the aggregate profit or loss of lines 10, 11 and 12 on regulated futures contracts (and options on futures contracts) for the year. Refer to Form 6781 and Instructions for guidance on how to report this amount. Box 13 is only completed on the 1099-B for Noncovered Securities.

Specific types of securities are exempt from 1099-B reporting, including:

  • Single stock futures
  • Money market fund redemptions
  • Options expirations
  • Options sales
  • Forex

More sales proceeds detail for stocks and bonds as well as FIFO profit and loss estimates for stock, equity options, single stock futures, Forex, and bonds are on your Form 8949 Worksheet. Gain and loss details for futures are on your Gain/Loss Worksheet for 1256 Contracts.

For 2011 there are several items of 1099-B reporting that should be considered:

Covered securities sold short on or after January 1, 2011 will be reported when the short position is covered. Securities sold short prior to January 1, 2011 were already reported in a previous year and will not be reported when covered.

No specific gain or loss is calculated on Form 1099-B.

All four 1099-B forms must be included with your tax return.

Form 1099-R:  If you received distributions and payouts from your retirement accounts, Form 1099-R is is available around January 31.

Note: Detailed explanations of Forms 1099 are available in the Tax Agency Reports section of the US Persons and Entities Tax Reporting section of the IB website.  

In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this FAQ was not intended or written to be used and cannot be used for the purpose of avoiding tax penalties that may be imposed on any taxpayer.

 

I have received notice that the Non-Individual Taxpayer Identification Number (TIN) on my IB account does not match that of the IRS. What do I need to do?

Why Your TIN May Be Considered as Incorrect

If you are a non-individual, such as a corporation, LLC, partnership, trust or similar entitiy, your TIN will usually be your Employer Identification Number (EIN). Often a non-individual taxpayer EIN does not match IRS records because you have provided IB with a “Doing Business As” name rather than the “Legal Name”. Similarly, the EIN will not match if it is not the number of the actual owner of the account (e.g. you have provided IB with the SSN of a partner rather than the EIN of the partnership).

 

What You Need To Do

You will need to compare the name and EIN per your records (e.g. recent business tax return) with the name and TIN on your IB account. Information regarding your IB account including a form for updating your information will be made available upon log in to Account Management. This comparison will require that you take one of the four actions outlined below. If you have any questions regarding your name and/or TIN as recognized by the IRS, please call the IRS Business and Specialty Tax Line at 1-800-829-4933 for assistance.

1. If the name and EIN on your account agree with the name and EIN per your records – Write the Internal Revenue Service Center where you file your income tax return and ask the IRS to send you a Letter 147C. This letter will confirm the name/TIN combination the IRS has on file for you. Once you are in receipt of this letter provide a photocopy to IB along with proof of identity and proof of address.

2. If the EIN on your account is different from the EIN through which you submit your business tax returns, but the name is the same - Update your EIN through the form made available upon login to Account Management. You do not need to contact the IRS.

3. If the name on your account is different from that through which you submit your business tax returns, but the EIN is the same on both

    a. If the name on your account is correct, contact the IRS to correct the name. Request that the IRS to send you a Letter 147C and once you are in receipt of this letter provide a photocopy to IB along with proof of identity and proof of address;

    b. If the name per the IRS records is correct, update your personal information through Account Management. Provide photocopies of supporting documentation (proof of identity and proof of address). You do not need to contact the IRS.

4. If both the name and EIN on your account are different from the name and EIN through which you submit your business tax returns

    a. If the name and EIN per the IRS records is correct, update your personal information through Account Management. Provide photocopies of supporting documentation (proof of identity and proof of address). You do not need to contact the IRS;

    b. If the name and TIN on your account is correct, contact the IRS to correct the name. Request that the IRS to send you a Letter 147C and once you are in receipt of this letter provide a photocopy to IB along with proof of identity and proof of address.

I have received notice that the Individual Taxpayer Identification Number (TIN) on my IB account does not match that of the IRS. What do I need to do?

Why Your TIN May Be Considered as Incorrect

If you are an individual taxpayer your TIN will be your Social Security Number (SSN) or, in the case of resident and non-resident aliens your Individual Taxpayer Identification Number (ITIN). Often an individual taxpayer TIN does not match IRS records because a name has changed through marriage, divorce, adoption, etc., and the change has not been reported to either IB or the SSA. Other times the account may not contain the correct SSN or ITIN of the actual owner or the title on the account does not match that used for filing tax returns (see Note 2 below).

 

What You Need To Do

You will need to locate your social security card and, if lost or misplaced, contact your local SSA office to obtain a replacement. If you are a resident and non-resident alien you will need to locate your ITIN card or authorization letter and, if lost, or misplaced contact the IRS to obtain a replacement. You will then need to compare the name and TIN on your social security card or ITIN card/authorization letter with the name and TIN on your IB account. Information regarding your IB account including a form for updating your information will be made available upon log in to Account Management.

This comparison will require that you take one of the following four actions:

1. If the name and TIN on your account agree with the name and TIN on your social security card or ITIN card/authorization letter - Contact your local SSA office to determine whether the information on SSA’s records is different from that on your social security card and to resolve any problem. If you are holding an ITIN card or authorization letter contact the IRS to reconcile their records. a. If the SSA or IRS determines that the information is different, provide photocopies of documentation supporting where the change has been made (e.g. revised social security card or ITIN card/authorization letter, or letter from the SSA or IRA stating that their records have been amended, along with proof of identity and proof of address). b. If the SSA or IRS determines that the information does in fact agree, provide a copy of a SSA or IRS letter confirming that conclusion along with proof of identity and proof of address.

2. If the TIN on your account is different from the SSN on your social security card or the ITIN on your ITIN card/authorization letter, but the name is the same - Update your TIN through the form made available upon login to Account Management. You do not need to contact the SSA or IRS. Provide photocopies of supporting documentation (social security card or ITIN card/authorization letter along with proof of identity and proof of address).

3. If the name on your account is different from the name on your social security card or ITIN card/authorization letter, but the TIN is the same on both – a. If the name on your account is correct, contact the SSA to correct the name on your social security card or IRS to correct the name on your ITIN card/authorization letter. Provide photocopies of supporting documentation (revised social security card or ITIN card/authorization letter along with proof of identity and proof of address); b. If the name on your social security card or ITIN card/authorization letter is correct, update your personal information through Account Management. Provide photocopies of supporting documentation (social security card or ITIN card/authorization letter along with proof of identity and proof of address). You do not need to contact the SSA or IRS.

4. If both the name and TIN on your account are different from the name and TIN on your social security card or ITIN card/authorization letter – a. If the name and TIN on your social security card or ITIN card/authorization letter is correct, update your personal information through Account Management. Provide photocopies of supporting documentation (social security card or ITIN card/authorization letter along with proof of identity and proof of address. You do not need to contact the SSA or IRS; b. If the name and TIN on your account is correct, contact the SSA to correct the name and SSN on your social security card or IRS to correct the name and ITIN on your ITIN card/authorization letter. Provide photocopies of supporting documentation (revised social security card or ITIN card/authorization letter along with proof of identity and proof of address). Proof of identity may be met through a government issued passport, driver’s license or green card (the document must be valid and include your name and photograph). Proof of address may be met through current lease, utility bill (less than 1 year old), mortgage statement or other evidence of property ownership. Supporting documentation may be scanned and sent via email to accountmanagement@interactivebrokers.com (please place your Account ID in the email subject line, Attn: Tax Reporting) or faxed to 312-984-1032.

 

IMPORTANT NOTES

1. Once you have identified the source of the mismatch, you will need to log in to Account Management and follow the instructions for confirming and/or updating your information. Account holders who fail to provide a combination of account name and TIN which can be authenticated against IRS records within 30 days of being notified of a 1099 mismatch may be subject to backup withholding and account restrictions.

2. Certain entity type accounts such as grantor trusts or single member LLCs may file taxes under the SSN of the individual rather than having an EIN assigned.  To avoid a TIN mismatch in these situations, the name of the individual taxpayer should be entered in the first box of the W9 titled 'Name (as shown on your income tax return)' and the name of the entity on the second line titled 'Business name, if different from above'.

How can I access historical statements and how will I obtain tax reports once my account has been closed?

Background: 

After an account has been closed, the account holder will continue to be provided access to their Account Management for the purpose of reviewing and printing historical statements along with historical as well as the following year's tax forms (once issued).  Access is provided using the same user name and password combination in place at the time of closing.  Accounts which were enrolled in the Secure Transaction Program will no longer need a security device to log into their account.

Will the consolidated statement reflect the tax basis choices of client accounts?

Übersicht: 

Clients have the ability to select one of three tax basis methods, First in First Out (FIFO), Last in First Out (LIFO) and Max Losses.  The method selected will affect the P&L values which are posted on the statements.

In an advisor structure, where the advisor has the ability to create a consolidated statement, those P&L values posted will properly reflect the tax basis choice as these calculations are done independent of how a statement may be viewed.

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