The full name of the IRS 1099-B Form is “Proceeds from Broker and Barter Exchange Transactions.” The US Revenue Services follows all federal income transactions to ensure the business in the country is held fair and square. It means that citizens need to undergo various procedures to report their tax returns to the Service every once in a while (usually, a particular, fiscal period).
As to the respective Form, as it appears from its name, you only need to use it if you have managed to sell a stock. The IRS tends to trace these transactions very carefully, so you should be very attentive when compiling such forms.
Typically, the employees of brokerages and barter exchanges use the 1099-B Form to keep official records of their clients’ losses and gains in a monetary equivalent. So if you are a US taxpayer and use the broker and barter services, you will receive the pre-completed Form template from them (not later than January 31 of the year following the current taxation period). But if for some reason (which is highly unlikely), you do not receive it, you can download and use an online copy. Not reporting your stock proceeds to the respective authorities in case of non-receipt is no lawful excuse. If you fail to do so, it would be entirely on you, and you will be subject to a penalty.
There are supplements that the US taxpayers shall, in turn, complete and file by themselves once they receive the Form template. The 1099-B has never filed alone, but with the 8949 Form and Schedule D. The supplements represent a sort of a receipt where you can reflect your income and loss that occurred during the current financial year. You can use the template you receive from your broker (or barter exchange service), transfer the results onto Form 8949, use it for the necessary calculations, and then enter your results in Schedule D. Eventually, only the total sum of gains is subject to reporting tax returns.
It might seem a bit complicated at first, but once you begin to work with the information, it gradually gets clearer. Below, we will review an example of the 1099-B Form so that you could get more familiar with it.
First off, the form will help you to avoid double taxation and overpaying your taxes in general. With this legal record, you will be able to prove both your gross proceeds amount and the fact that you had acquired it for a fair market value. If you have been bartering tangible property, cash, or stock units, you will need to report the proceeds from those as well. If you are not sure what exactly to report, you can always get counseling from a professional tax adviser. Do not hesitate to seek legal help in moments of doubt.
So, if you have sold stock during this particular financial accounting period, you should report your gains and losses to the Revenue Service. To sum up and make it easier to comprehend and memorize, here is a list of primary reasons to use the 1099-B Form:
As you can see, the amount that has to be declared directly depends on your cost basis. That is why you always need to double-check the info that comes in the 1099-B Form that the broker sends you and the information that you calculate in the supplements.
As we have mentioned above, the brokerage and barter exchange employees file the info about your stock transactions to the IRS themselves. But actually, the Service receives that info twice: the second time is with the help of your completed and authorized supplements.
Form 1099-B consists of several copies designated for different authorities who may be concerned by this information. So, one copy goes to you as the taxpayer; another copy goes to whoever has sold the stocks (usually, a broker). Plus, if the broker company engages in business and bargaining activities with another broker, they have to file a separate Form 1099-B and keep their respective records on tax returns.
This Form consists of several copies, and while Copy A is only available for information purposes, other copied of it may be filled out and filed online. We encourage you to use our latest software developments to create a customized legal form you need and edit the PDF document online, which is very convenient. Copy A is filled out by the broker and goes straight to the IRS for record and information purposes. So, keep that in mind when filling out the Form.
Below, we suggest you a comprehensive guide that you can use to fill out the form accurately and effortlessly. Read the compilation instructions on the official website to get acquainted with the specific terms and definitions before you proceed to fill out the Form. Once you do, ensure to follow the guide below step-by-step.
Checkbox the Form Status
At the very top of the Form, you will get two options to designate its current status: Void or Corrected. These are the options you get, as the first copy will already be at the IRS office once you receive yours. Copy A is the one that has to remain scannable. If you have noticed some miscalculations in the original Form, you can make your corrections or request to recognize it as void and send it to the Revenue office.
Indicate the Payer’s Name, Address, and Contact Info
In the first section of the form, you need to provide the full legal name and address of the Payer (the one that held the sales transaction and the one that received gains or losses from it). Include the payer’s contact information in this section as well (usually, a daytime telephone number is enough).
Provide the TIN of the Payer and the Recipient
Enter the TIN of both parties of the sales transaction in the respective blank boxes.
Enter the Recipient’s Name
Now, you need to provide the recipient’s data. Start filling it out with the recipient’s full legal name and then proceed to the next boxes.
Insert the Recipient’s Address
Provide the address of the payment recipient. Enter the street and building and apartment number in the first blank section and then indicate the state, ZIP, city/town, province/county, and other applicable information.
Provide the Account Details
Here, you need to designate the customer’s account info. Be careful when filling out this section and ensure that the broker has filled it out correctly. The information that goes here depends on the kind of sales and the recipient; it may be a cash-on-delivery account, for example.
The next couple of fields also require that you enter the Committee on Uniform Security Identification Procedures number (shortly CUSIP) and FATCA. The first one is a digit that only brokers use for transactional reporting, while the latter has an external macroeconomic impact and is used by foreign entities for tax reporting.
If you obtain exhaustive information, you may fill this field out by yourself. If not, you may go with the broker’s information or ask for the tax adviser’s assistance.
Define the State Data and Tax Amount
Provide the name of the state, the authorities of which have withheld the taxes for the subject sales transaction, its tax identification number, and the tax amount withheld.
Enter the Property or Stock Data
In these couple of sections, you need to provide a detailed description of the property that took part in the sales transaction. First, define the property, then insert the date you acquired it and the date when you sold it in the corresponding boxes.
Describe the Proceeds
For Section 1 D through G, you need to provide the details on your proceeds. Enter the amount in US dollars in section D, then insert the cost or other basis (typical for a short-term transaction), acquired market discount, and the wash sale loss disallowed. The wash sale loss amount is counted in accordance with the CUSIP data.
Define if that is a long-term or short-term sales transaction; checkbox the most suitable option out of the three given to do so.
Define the Federal Income Tax and other Details
Enter the federal income tax amount withheld in US dollars. Ensure the check the corresponding box if there was an uncovered security amount.
Tick the boxes of the corresponding proceeds type that either you or the broker have already reported to the IRS.
Describe the Profit (if applicable)
In the next couple of sections, you need to enter the respective amounts of realized and unrealized profit or loss acquired from the transaction and the aggregate proceeds on contracts (if applicable). Please pay attention to the dates indicated in the document.
Check if There Was a Barter Condition
Ensure to tick the box in the next section if there was bartering involved. If so, define the exact amount in US dollars below (as shown in the picture).
Fill Out Form Reference
There also is a specific field at the top of the form (right next to the payer’s data) that refers to Form 8949. As we have mentioned above, these forms are filled out by the payer in combination, so all the data that you insert in Form 1099-B shall comply with the info designated in Form 8949. Leave a mark if you have adjusted your version, changed the amounts, and want to provide your information and calculations in the supplements.