Tax Reporting: Form 2439

Form 2439, "Notice to Shareholder of Undistributed Long–Term Capital Gains", reports to owners of Regulated Investment Companies (RICs) and Real Estate Investment Trusts (REITs) undistributed capital gains allocable to them. A separate form 2439 will be issued for each investment. These forms will be issued 90 days following the fiscal year end of the RIC or REIT. Note that some RICs and REITs do not have calendar fiscal years, it is best to consult the website of the investment or your tax advisor for specific guidance in this area.

 

 

Tax Reporting: Reporting 1099 Information to the IRS

IB sends an electronic file to the IRS with the same information that was reported to you on Forms 1099.

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: Form 1099-DIV tax information

Generally, individual investors will need to report Form 1099-DIV information on IRS Form 1040, "U.S. Individual Income Tax Return." Depending on the type of information reported on your Form 1099-DIV, you may need to include with Form 1040 additional forms such as Schedule B, "Interest and Ordinary Dividends" Schedule D, "Capital Gains and Losses." and/or Form 1116, "Foreign Tax Credit." All IRS forms are available online free of charge at www.IRS.gov/formspubs or by calling the IRS at 800.829.3676 (800/TAX FORM).

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: Profit or Loss Realized for Closed Contracts on Form 1099 for Noncovered Securities

Profit or Loss Realized for Closed Contracts on Form 1099 for Noncovered Securities is the aggregate profit or loss recognized over the course of the year from transactions in commodity futures and regulated futures contracts which have been closed, reached final settlement or, in the case of options, expired.

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.

W8 Re-certification

If you are not a U.S. citizen or entity formed within the U.S. and have an account with Interactive Brokers, you are requested to declare your citizenship or country of formation with the US tax authority (IRS). This declaration can be done online by correctly filling out the W-8BEN form. Filling out this form is an easy process that only takes a few minutes. In the short movie below, we show you where to find the W-8BEN in your IB account management and how to fill it out.

If you fail to declare your foreign citizenship or country of formation, and IB does not have a valid W-8BEN form on file, you are presumed to be a US person/entity without a proper tax certification. As a US person/entity, you will be subject to backup withholding at a rate of 28% on interest, dividends, and substitute payments in lieu; as well as gross proceeds. 

Every 3 years the IRS requires a re-certification of the W-8BEN form. IB will ask the beneficial account owner to re-certify their foreign status by re-signing the W8-BEN in order to continue their status as a foreign person and claim the tax treaty benefits. If you experience any problems or have questions regarding the W-8BEN form or how IB handles Non-US persons and entities, select this Tax Information and Reporting link and choose the tab Non-US Persons and Entities or consult the following IRS information page for more details: www.irs.gov/instructions/iw8/ch02.html

IRA: 2015 Tax Reporting

The Internal Revenue Service (IRS) requires certain transaction reporting within the IRA

Tax forms for eligible accounts will be published by January 31 (Form 1099-R) and by May 31 (Form 5498).  These forms display the IRA distributions and IRA contributions made for the previous tax year.

Select from the following for additional information.

What to Expect

Reconciling Transactions

Tax Form Corrections

Understanding Form 1099-R

Understanding Form 5498

 

What To Expect

IRA tax forms do report: deposits, withdrawals, rollovers, conversions, recharacterizations, year end fair market value, and US tax withholding from withdrawals.

IRA tax forms do not report:  cost basis, sale proceeds, payments-in-lieu, dividends, credit interest, debit interest, foreign tax withholding, and trustee-to-trustee transfers.

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Reconciling Transactions

Your Interactive Brokers monthly and annual activity statements list all IRA cash deposits and withdrawals, as well as broker-to-broker asset transfers via ACATS.  The account statements provide the NAV for each transaction. Contribution and distribution tax years and codes do not appear on the activity statements.

In order to obtain specific IRA contribution/distribution designations, contact Customer Service by Chat or Inquiry/Trouble Ticket via Account Management.

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IRA Tax Corrections

Tax correction requests for open IRAs must be received in writing to Interactive Brokers, not Equity Trust Company, through the secure Inquiry/Trouble Ticket via Account Management

For closed IRAs, we kindly ask you to submit correction request using the form available on our website through our Messaging System.

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Understanding Form 1099-R

The IRS requires that any distribution or cash withdrawal taken in the prior year be reported by the account's administrator.  This form reports the IRA distributions made from each IRA account type.

Data displayed is received from the withdrawals, conversions, and recharacterizations in your IRA.  This may include money distributed to another tax-deferred account as a rollover, conversion, or recharacterization.

For explanations about each line item on the form, read the instructions for Participants or contact IB's Customer Service. 

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Understanding Form 5498

The IRS requires that any contribution or cash deposit received in the prior year be reported by the account's administrator.  This form reports the IRA contributions made from each IRA account type.  Generally, the tax form is published by May 31, but may be issued no later than June 30.

The data shown on the form includes the following:

  • 2015December 31 Fair Market Value
  • 2015 Contributions
  • 2015 Rollover Deposits
  • 2015 Roth Conversions
  • 2015 Recharacterizations
  • 2014 and 2015 SEP Contributions made in 2015

For explanations about each line item on the form, read the instructions for Participants or contact IB's Customer Service. 

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Click here to return to the Retirement Account Resource page.

Disclaimer:  IB does not provide tax advice. 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 international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a q

 

IRA: Charitable Donations from IRAs

Übersicht: 

TAX UPDATE:  The Protecting Americans from Tax Hikes Acts of 2015 (PATH) was approved by Congress December 16, 2015, and is expected to be signed into law by the President.  This will permanently allow IRA charitable distributions.  IB will accept distribution requests for processing in anticipation of the law. 

[Note: We recommend that you consult a qualified tax advisor or refer to the U.S. Internal Revenue Service before proceeding with a distribution.]

IRA owners 70½ or older may request an IRA distribution direct to a “qualified charity,”  by as much as $100,000 of IRA assets per year.  The following FAQs provide basic answers.

 

Charitable Distributions

What is a Qualified Charitable Distribution (QCD)?

What is a "qualified charity?"

Where can an IRA owner find additional information on QCDs?

Withdrawal Processing

Can IB customers submit a QCD withdrawal online?

What amount may be withdrawn? Why?

Where are the funds disbursed?

Does the distribution count towards the Required Minimum Distribution (RMD) amount?

Eligible IRA Accounts

Is the Charitable Distribution allowed from all IRAs held at IB?

Are the QCDs allowed from other IRA and retirement plans not held at IB?

QCD Tax Reporting

How is the QCD reported to the IRS?

Can any taxes be withheld from the distribution?

Do federal taxes have to be paid on the distribution?

Does a state or municipal tax have to be paid on the distribution?

 

 

Charitable Distributions

What is a Qualified Charitable Distribution (QCD)?
A distribution from an eligible IRA to an eligible charitable organization from an individual 70 ½ or older3.

How to determine if a charity can receive the QCD?
The IRS Exempt Organizations Select Check allows users to "Search for Charities" among a list of organizations eligible to receive tax-deductible charitable contributions.

Where can an IRA owner find additional information on QCDs? Visit Charitable Donations for IRAs for additional information on qualified charitable distributions. See also IRS Publication 590-b.

 

Withdrawal Processing

Can IB customers submit a QCD withdrawal online?
Yes.  Requests are processed manually with your completion of the paper form.  Print the IRA Charitable Distribution Form and upload the form to the Account Management Menu's secure Message Center for processing.

For security purposes, the withdrawal request should be initiated by the IRA owner through the secure Customer Service Message Center located within the Account Management menu.   Click the header Support and Message Center to access the Message Center. 

You may submit and track the request directly with Customer Service using an inquiry ticket.

What amount may be withdrawn? Why?
IB will process the tax-free QCD of any available amount from an eligible IRA. Why? Although the donations must not exceed $100,000 per year to retain QCD status, gifts may exceed this limit.

Where are the funds disbursed?
Funds are made payable to the IRS qualified charity and sent direct to the charity. Only funds disbursed directly to the charity can be designated from your IRA as a QCD. 

Does the distribution count towards the Required Minimum Distribution (RMD) amount?
Yes

 

Eligible IRA Accounts

Is the Charitable Distribution allowed from all IRAs held at IB?
No, see the list below.  IRA owners should contact a qualified tax advisor about how to preserve QCD tax benefits. Not all distributions are created equal. A tax advisor will be able to assess an IRA owner’s best choice.

Traditional IRA > YES
Rollover IRA > YES
Roth IRA > YES
Inherited IRA > YES, if the beneficiary is at least age 70 1/2
SEP IRA > NO
Education IRA > NO

Are the Charitable Distributions allowed from other IRA and retirement plans not held at IB?
No, not directly.  Retirement plans, employer sponsored SEP IRAs, and Simple IRAs (account classifications not held at IB) are not eligible for a QCD election. IRA owners may be eligible to rollover assets from these plans into a traditional, rollover, or Roth IRA to take a charitable distribution.  IRA owners should contact a qualified tax advisor or their retirement plan administrator.


QCD Tax Reporting

How is the QCD reported to the IRS?
Equity Trust Company, the IRA plan administrator for all IB IRAs, reports the charitable donations on Form 1099-R when issued.

  Can any taxes be withheld from the distribution?
No.

Do federal taxes have to be paid on the distribution?
Generally, federal taxes are not paid with QCDs. But distributions in excess of the IRS limit may be subject to income tax.  IB recommends that customers contact a qualified tax advisor.

Does a state or municipal tax have to be paid on the distribution?
Contact your tax advisor or local tax authority on state and municipal requirements for the distributed amount.

 

Disclaimer:  IB does not provide tax advice. 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 international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a qualified tax advisor or refer to the U.S. Internal Revenue Service.

Year End Statement & Report Comparison

Übersicht: 

The Interactive Brokers Year End Reports provide an activity review for US persons and US entities.  The various account statements provide the transaction details as the basis for each report.   Each of the standard reports spans the time period from January 1 through December 31.

Some reports, such as the Gain/Loss Summary Worksheet, may consolidate transactions and calculations.  For the sake of conserving volume, trade activity may be combined.  The account statements include all activity.  For your convenience and to assist with your reconcilation, customized statements permit activity displays suitable for your personal needs (see the tab "Customized Templates" for details).

All US tax reports include the total figures as required under the US tax laws.

Non-US Persons and Entities

Income paid from US sources to non-US  persons and entities may find this comparison helpful.  IB is required to withhold US taxes at a rate of 30% on payments of US source stock dividends and substitute payments in lieu. Both the withholding and the income is reported on the US tax Form 1042-S. 

For additional information about how IB handles non-US persons and entities, select this Tax Information and Reporting link  and choose the tab Non-US Persons and Entities.

Year End Reports (For Trading) Comparison shown below identifies the most common transaction types which appear on the year end reports.  Not all activity is included on each report.

Comparison of trades shown on the year end reports
Year End Reports Stock Bond Equity & Index Option Single Stock Futures Futures Forex
Form 1099 Sell Sell - - Gain/Loss -
Form 1042-S - - - - - -
Annual Statement Buy/Sell Gain/Loss Buy/Sell Gain/Loss Buy/Sell Gain/Loss

Buy/Sell Gain/Loss

Buy/Sell Gain/Loss

Buy/Sell Gain/Loss
Gain/Loss  Worksheet
Cost/Sell Gain/Loss Cost/Sell Gain/Loss Cost/Sell1 Gain/Loss1 Cost/Sell Gain/Loss - -
1256 Worksheet
- - Gain/Loss5 - Gain/Loss -

NOTES:  (1) Only cash settled; (2) Gain/Loss Worksheet was first published by IB with tax year 2007.  Worksheets for prior years are not available.  IB did provide gain and loss data on the Annual Statements; (3) The 1256 Worksheet was first published by IB with tax year 2008; (4)  Option transactions are not 1099 or 1042-S reportable transactions.  In accordance with the IRS guidelines, IB excludes the activity from the tax reports; (5)  Only broad-sed index options appear on the 1256 Worksheet

 

Year End Reports (For Income) Comparison shown below identifies the most common types of income which appear on the year end reports.  Not all income is reportable on a 1099 or Dividend Summary.

Comparison of income shown on the year end reports
Year End Reports Dividends Credit Interest Debit Interest Accruals Pay In Lieu Credit Pay In Lieu Debits Fees
Form 1099 Yes Yes No No Yes No No
Form 1042-S  Yes Yes No No Yes No No
Annual Statement Yes Yes Yes Yes Yes Yes Yes
Dividend Summary Yes No No No Yes Yes No
Gain/Loss Worksheet No No No No No No No
1256 Worksheet No No No No No No No

NOTES:   (1) US Tax Form 1042-S is provided to non-US persons/entities, along with the Dividend Summary.  The Tax Form reports interest, dividends, substitute payments in lieu, and US tax withholding from US securities; (2) For US persons/entities, the Dividend Summary may list dividends as potentially eligible for treatment as “Qualified” based on the holding period.  IB does not report this on the 1099-DIV or to the Internal Revenue Service; (3) Debit transactions are not 1099 or 1042-S reportable transactions.  In accordance with the IRS guidelines, IB excludes the activity from the tax reports; (4) Exchange, market data, and activity fees


 

 

2009 Gain/Loss Summary Worksheet: General Explanation

Important Note:  The Worksheet has been prepared using IRS guidelines for information purposes only.  It is not intended to replace any official IRS tax forms or schedules; and should not be regarded as an IRS Form Schedule D.

Interactive Broker's 2009 Gain/Loss Summary Worksheet ("Worksheet") provides the capital gains and losses for your account's year-end review.  Investors of a limited number of securities will find the pairing of 2009 sell trades useful.  Designed to aid with your year end reconciliation, the following securities and trades are included: Bonds, Equity Options, Fractional Shares, Index Futures*, Mutual Funds, Short Sale, T-Bills, Tender Offers, and WHIFITs.

A general explanation of the Worksheet is organized below by Parts, Columns, and Totals.

 *Only cash-settled

Worksheet Parts

The Worksheet is divided into two parts.  The period in which you held the position determines whether or not Short-Term or Long-Term applies. 

Part 1 - Short Term Capital Gains and Losses - Assets Held One Year or Less

Part 2 - Long Term Capital Gains and Losses - Assets Held More Than One Year

Worksheet Columns

Each section contains the following seven columns to identify your trades.

(a) Description of property (b) Date acquired (c) Date sold (d) Sales price (e) Cost or other basis (f) Gain or (loss) Codes

1.  (a) Description of property...shows the security symbol, name, quantity, and other information to identify the asset sold.

Example:  500 sh. DB - DEUTSCHE BANK AG-REGISTERED

2.  (b) Date acquired...shows the trade date of your security's purchase. 

Asset Transfers:  IB has entered the date supplied by you through Position Transfer Basis.  If an update was not received by year-end, then the asset transfer settlement date appears. See your monthly or annual summary for details. 

Short Sales:  The box is left blank if the closing trade has not been completed.  For short sales included on a prior year Worksheet or 1099-B, the code ADJ is entered.

3.  (c) Date sold...shows the trade date of your security's sale.

4.  (d) Sales price...shows the gross security sale price, net of commissions. 

Option Adjustments:  For exercised call options, the writer's sale proceeds have been increased by the amount received for the call. For exercised put options, the holder's sale proceeds have been reduced by the cost of the put. See IRS Pub. 550, page 57, for details.  For expired options, an amount of 0.00 is entered, followed by the Code "Ep".

5.  (e) Cost or other basis...shows the total price paid for your security, plus commissions.

Corporate Actions:  Adjustments have not been made for any stock splits or non-dividend distributions. See IRS Pub. 550, page 44, for details.

Mutual Funds:  IB does not use an average basis for mutual funds. The First In, First Out (FIFO) method is used.

Original Issue Discount:  The basis has not been increased by the amount of OID included in your income. See IRS Pub. 550, page 13, for details.

Option Adjustments: For exercised put options, the writer's basis has been increased by the amount received for the put.  For exercised call options, the holder's basis has been increased by the cost of the call. See IRS Pub. 550, page 57, for details.

6.  (f) Gain or (loss)...shows the calculation for each security using the tax execution methods First-In, First Out (FIFO), Last In, First Out (LIFO), or Maximize Losses (ML). 

Loss: Negative amounts are identified in parentheses.  For example, a loss of $2,000.00 displays as (2,000.00).

Tax Method:  If no code appears in the Codes column, then FIFO applies.  The other methods are noted by either LI = LIFO or ML = Maximize Losses.

7.  Codes...shows various trade designations, such as: corporate actions, asset transfers, or option assignments.

Codes and Meanings Table:  The last page of the Worksheet contains a table to identify each non-security symbol used.

Worksheet Totals

1. Subtotal adjustment from option assignment...shows the total amount of all sale proceeds increases or decreases made from option assignments to the assigned stock sale proceeds (see Cost or other basis details above). 

The adjustments, in accordance with IRS guidelines, are added or subtracted in order for the next Subtotal line to equal the amount reported by IB on the 1099-B, box 2.  Please keep in mind that IB does not report any option proceeds or adjustments to sales proceeds from assignments on the 1099s.

2.  Subtotal for stocks, bonds and T-bills...shows the total non-adjusted proceeds reported for each trade under column (d) Sales price for stocks, bonds, and T-bills only.  This amount should equal the 1099-B, box 2, amount. 

1099-B, box 2:  In general, this 1099 figure should equal the combined Parts 1 & 2 Subtotal for stocks, bonds and T-bills figure.

3.  Total...shows the combined proceeds for all trades under column (d) Sales price, including option sale proceeds.

Total Option Sale Proceeds:  Subtract the Total amount of column (d) from the Subtotal for stocks, bonds and T-bills of column (d) to obtain the total proceeds from all option sales.

 

Click here to go back to the main 2009 Worksheet article.

Note:  Securities classified by the IRS as IRC Section 1256 contracts are included on the Gain/Loss Worksheet for 1256 Contracts.

 


IRS 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.

 

What’s New for the 2009 Gain/Loss Summary Worksheet

 

 
Wash Sales – If you sold a stock or security at a loss, but re-purchased within 30 days the same or substantially the same security, the Worksheet identifies the sale using code “WS” (Disallowed loss from wash sale).
 
Social Security Number – For security purposes, the first 5 digits of the tax identification number have been removed.
 
Tax Basis Declaration – Two new tax basis methods, made available January 2009, help identify gain/loss methods for trades.  The optional methods Last In, First Out (LIFO) and Maximize Losses (ML) join the default First In, First Out (FIFO) on the Worksheet.
 

Select Gain/Loss Summary Worksheet: Considerations for details about the new features.

Click here to go back to the main 2009 Worksheet article.

 

 

 

IRS 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.

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