Tax Reporting: Understanding Qualified Dividends

Qualified Dividends are distributions which meet the criteria to be subject to a beneficial federal tax rate. In general, qualified dividends are distributions received from U.S. Domestic corporations or qualified foreign corporations where you have owned the investment for more than 61 days before or after the ex dividend date. IRS Publication 550 “Investment Income and Expenses” available free on line at www.IRS.gov and/or your tax professional can assist in determining if your dividends are eligible for the beneficial rate.

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: Understanding Ordinary Dividends

Dividends are paid by corporations, mutual funds, money market funds, and other entities such as REITs. Ordinary dividends include payments from foreign securities such as ADRs and foreign companies and net short-term gains from mutual funds. Dividends that have been reinvested are also included in this amount.

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: I already filed my taxes and have received a Corrected Form 1099. What do I do now?

You will have to file an amended tax return to report the information as reported on the corrected Form 1099. As the IRS verifies the information on your tax returns with the 1099s received from banks, brokers and other sources, you may receive a notice from the IRS indicating that your return was filed using incorrect information. Consult your tax or legal advisor for further information.

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: Withholding on IRA Distributions in Connection with Rollover

We are required to apply 20% withholding tax from IRA distributions, unless your IRA rollover is sent directly account to account. Box 4 of the 1099-R reports any withheld taxes. Please note that for any tax deferred account rollover on which taxes have been withheld, the full amount (including the taxes) must be re-deposited into a tax-deferred account within 60 days for the transaction to be income tax free.

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: Gross Proceeds and Commissions on Form 1099

The gross proceeds balance is net of commissions.

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: Unable to Log into Account Management to get 1099s

Contact our Customer Service Department, and advise the service agent that you are not able to log into the Account Management.

If you have your username, we will ask a series of security questions for identity verification. Once the information has been verified, our customer service department will establish a temporary password to allow you to gain access.

If you do not have your username, we will require you to send additional information to our new accounts department in order to verify your identity. Please be advised that in this case additional time may be required to complete the verification process.

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: Understanding The Codes in Column B of the Form 8949 Worksheet

 

Tax Reporting: Form 1042-S Availability

The form will be available to you by March 15th and is located in the Tax Forms section of Account Management.

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: Where Tax Withheld is Sent

Interactive Brokers remits the tax withheld to the U.S. Treasury.

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: Availability of K-1s from Publicly Traded Partnerships (PTP) and Royalty Trusts

K-1s are prepared and distributed by the individual partnership or trust.  IB does not have access to these documents.  Most PTPs and Royalty Tusts have investor contact phone lines through which you can obtain this information; additionally many have investor websites from which you can download your information.

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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