1099-B form is issued by brokers and barter exchanges which states the Proceeds from Broker and Barter Exchange Transactions. It is an Internal Revenue Service (IRS) tax form. All the gains and losses of broker and barter exchange transactions are listed in this form. All the Broker and Barter exchanges must mail this form by 31st of January.
Who Can File Form 1099-B?
For each and every person who sold stock, options, trading vehicles and other commodities, broker has to submit Form 1099-B. They must submit the Form-1099B to IRS so they can keep a record of a taxpayer’s gains or losses associated with the brokered sale or trade of certain securities.
Usually the information is transferred from Form 1099B to Form 8949 by the taxpayers to calculate the preliminary gains or losses associated with the trade or sale of certain securities. The result thus calculated is then transferred into Schedule D of the Tax Return. For example, assume you traded out multiple stocks last year and the gains from those sales are $20,000. This $20,000 amount is reported by the brokerage to the Internal Revenue Service (IRS) through Form – 1099B. As a taxpayer, you can always include this amount of $20,000 as a capital gain while filing your income taxes.
Details of the investment and totals must be included in the Form 1099B. Information in this case include:
• Description of the said investment.
• Date and Price of the purchase.
• Date and Price of the sale.
• Associated gains or losses.
Note: Commissions paid as a part of these transactions are excluded.
Capital losses can be deducted or subtracted from the capital gains and the difference may be used to reduce the reported taxable income. The amount of capital loss that can be deducted on each tax year from the income is subject to limits. However, if the capital loss is exceeding said maximum limit is on a particular year, the difference may be carried forward to the next year.
To conclude, Form 1099B is the form sent by your broker to document all the gains and losses incurred through the investments in the year. According to the guidelines of the Form 1099B, you must report the incomes stated in the Form and those must be attached to your tax return while filing taxes. Even it is mandatory thing to report these, don’t panic if you haven’t done the same. The IRS has a procedure for you to follow in these circumstances to correct your mistake as well as to minimize any penalties you might incur.