Tax Reporting: "Taxable amount not determined" is Checked on Form 1099-R Despite a Taxable Amount Being Reported

The IRS requires that we report the full amount of your IRA distribution in Box 1 (Gross distribution). In Box 2a (Taxable amount), we also report the full amount distributed unless you have directly rolled (transferred account to account) your funds to another IRA custodian/trustee. If funds are distributed directly to you, we cannot determine the taxable amount, since we do not know whether you have made any non-deductible (after-tax) contributions to this IRA account. Box 2b is checked to indicate that we have not determined the taxable amount. Please consult your tax advisor to determine if you have made any non-deductible (after-tax) contributions to your IRA account, which may lower your taxable amount.

Refer to IRS Publication 590, Individual Retirement Arrangements (IRAs), for additional information on figuring taxable and nontaxable amounts, and consult your tax advisor.

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 5498

Form 5498,"IRA Contribution Information", is an information form used to report contributions and rollovers to Traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs. Form 5498 also reports the Fair Market Value (FMV) of your IRA account as of year-end.

Please check Box 11 on the form, if you take a required minimum distribution (RMD) for all years after you have attained age 70 1/2. If you attained 70 1/2 years or older in the previous tax year, Federal law requires that you begin taking minimum distributions from your Traditional, Rollover or SEP IRA account(s) in the following calendar year.

Plan custodian must distribute 5498s to participants and the IRS no later than May 31 of each calendar year. The timing of this form is due to the fact that contributions for the prior year may be made up to the filing date of your return (April 15). For SEP IRA's contributions may be made up to the filing date of the return plus extensions.

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: How does a trustee-to-trustee transfer differ from a rollover?

A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, is not considered a rollover. Because there is no distribution to you, the transfer is tax free. Because it is not a rollover, it is not subject to the 1-year waiting period required between rollovers.  Trustee-to-trustee transfers are not required to be reported on Form 1099-R.

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-R Reporting IRA Rollovers

A rollover occurs when money is distributed from one tax-deferred account and deposited within 60 days to another tax deferred account. There are two types of IRA rollovers: 1) a direct rollover, which occurs when funds are transferred directly from one account to another account by the account custodians/trustees, and 2) a distribution, which is made directly to you and within 60 days you deposit the full amount (including any taxes withheld) into a new IRA or other tax deferred account. The custodian/trustee distributing the funds will issue you a 1099-R reporting the payment/transfer of funds. The code in Box 7 indicates what type of payment was made. The custodian/ trustee receiving the IRA funds will issue a Form 5498 in May reporting the contribution to the receiving IRA account which reports to the IRS that you deposited the money into another IRA.

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: Report Distribution from Retirement Plan Rolled Directly into an IRA on Form 1099-R

The IRS requires the trustee of an employer-sponsored retirement plan to report a direct rollover to an IRA, treated as a distribution and a subsequent rollover, on Form 1099-R.  The successor trustee is required to report the rollover contribution on IRS Form 5498.  IB, the administrative manager and trustee for your retirement accounts, provides Form 1099-R directly to you. For a detailed description of Form 1099-R, go to the US Persons and Entities tab located in the Tax Reporting section of the Accounts menu on 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.

Tax reporting: Detailed Information about Forms 1099

Detailed explanations of Forms 1099 may be found on our website under the US Persons and Entities tab.  In addition, refer to instructions included with the specific Form 1099 on the IRS website.

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: Form 1099 Information

Yes.  IBKR provides the same information reported to you from your IBKR accounts on Form 1099 to the Internal Revenue Service (IRS).

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 for an Amount Received from a Deceased or Divorced Person's Account

If assets are transferred from an IRA or other qualified plan due to divorce, or you receive inherited IRA distributions due to a death, the IRS requires that you report these amounts.

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: When a foreign security is sold, how does IBKR apply a currency exchange rate?

If the proceeds of a sale are paid in foreign currency, IBKR must convert the amount to be reported into US dollars. Generally, IBKR converts the foreign currency on the payment date at the spot rate or by following a reasonable spot rate convention, for example a month-end spot rate or monthly average spot rate. Your Activity Statements reflect the spot rate at the end of the applicable month or year depending upon the statement you are viewing. Interest or dividend payments are converted at the spot rate on day of payment for purposes of Form 1099 reporting.

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: Bond Sale Transactions that Occur in December but Settle in January

As proceeds are reported on a trade date basis a sale is reportable in the year it is executed not settled. In the case of bond sales which take place in December but which do not settle until the following year, the sale proceeds will be reported in the year of the trade, and accrued interest, if any, will be reported included in the following year’s 1099-INT, when the funds are received in your account.

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.

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