Tax Information and Reporting
For US Persons, IBKR issues 1099 forms in a consolidated format. Most 1099 forms will appear on one statement rather than as separate forms.
Information reported on the Consolidated Form 1099 is also reported to the IRS and should be reported on your federal tax return. Please consult your tax advisor for proper reporting of all Form 1099 amounts.
Your Consolidated Form 1099, Forms 1099R and 5498 for IRA accounts are available to view and print by accessing IBKR's website, selecting Account Management or Client Portal from the Login menu and then clicking Reports > Tax > Tax Forms.
Consolidated Form 1099 will be available February 15 for the immediately preceding year. Form 1099-R for IRA accounts will be available by January 31 for the immediately preceding year. Form 5498 for IRA accounts will be available by May 31 for the immediately preceding year.
Form 1099-INT reports interest income including taxable and tax-exempt interest dividends from mutual funds paid to you during the year.
Line 1 reports interest income, exclusive of US savings bond and US Treasury obligations interest. Interest from US savings bonds and US Treasury obligations is reported in Line 3. If the IRS has notified us that income tax must be withheld on interest income in your account, US tax withheld, if any, amount will be reported in Line 4.
Interest payments details are part of the supplemental information on the Consolidated 1099
US savings bond and treasury obligation interest is separated for state tax reporting. Interest on these obligations is generally not subject to state tax.
Tax-exempt interest (Line 8) – is generally not subject to federal taxation. If you own municipal bonds, then interest on bonds from your home state is generally not subject to state tax. However, municipal interest from other states is taxed in your home state.
Line 9: Some interest paid by muni bonds is subject to AMT (Alternative minimum tax), amount in box 9 is the amount by which you adjust your taxable income to calculate AMT tax on Form 6251.
Lines 10-13 provide information concerning bond premiums and discounts: Depending on your individual tax circumstances and elections, these items must be reported on your tax return. We suggest that you consult your tax advisor about bond premiums and discounts.
Accrued interest paid: Provided in supplemental information on consolidated 1099 – reduce the amount of reported interest by interest paid.
Interest payments received on interest producing securities loaned out are reported as substitute payments in lieu of interest on Form 1099-Misc.
If you have an IBKR margin account you may have margin interest expense paid from your account. Margin interest is included as an informational item in your Consolidated 1099. Please consult your tax advisor for the proper treatment and reporting of margin interest paid on your tax return.
Form 1099-OID reports the amortization of bond interest on discounted bonds taxable annually. Original Issue Discount (OID) is the difference between an obligation's stated redemption price at maturity and the issue price of the debt instrument.
Interest on bonds sold at a discount at the time that a bond or other debt instrument is issued and accreted annually is called Original Issue Discount or OID. Interest income is recognized and the cost basis of the bond is increased.
The original issue discount (OID) greater than $10 is reportable and Form 1099 OID will be issued.
Line 1: OID – amount computed as OID for year – based on IRS tables
Line 2: Other periodic interest – generally interest paid by a bond as a special payment or received on sale.
Line 6: OID on US Treasury Obligations
Form 1099-DIV reports ordinary dividends credited to your account during the year, short-term capital gains distributions and total capital gains distributions, as well as non-dividend distributions (return of capital), dividends paid by foreign corporations, mutual funds and money market funds.
Line 1a: All dividends received.
Line 1b: this line reports the amount ELIGIBLE for qualified dividend treatment. Qualified dividends are taxed at the Long-term Capital Gain (LTCG) tax rate (0%, 15%, & 20%).
Line 2a: Long-term capital gain distributions – usually from mutual funds – reported on schedule D of return and are taxed at long-term capital gain rate.
Line 2b: Un-recaptured sec. 1250 gain
Line 3: Non-dividend distributions – return of capital
Line 5: Investment expenses – expenses of a non-publicly offered regulated investment company, generally a non-publicly offered mutual fund.
Line 6: Foreign tax paid – foreign tax withheld at the source on dividend payments
Lines 8 & 9: Liquidation distributions - usually from mergers or acquisitions or other corporate restructuring actions.
Line 10: Exempt Interest dividends. Generally dividends paid by tax-exempt bond funds
Line 11: Amount on line 10 used to calculate AMT. Please see explanation in 1099-INT
Dividends declared and not yet paid at year-end are not generally included; however, there is an exception for mutual funds payments. Any dividend declared by a mutual fund during October, November, or December and paid the following January is reported in the year declared.
Dividend payments received on securities loaned out are reported as substitute payments in lieu of dividends on Form 1099-MISC. Payments in lieu of dividends are ordinary income and not eligible, except in specific circumstances for qualified dividend tax rates.
Please see more details in Dividend Report.
All IRS forms are available free of charge at www.IRS.gov/formspubs or by calling the IRS at 800.829.3676 (800-TAX FORM)
Form 1099-B reports proceeds from securities transactions including sales of stocks, bonds, short sales, redemptions, tenders and bond maturities. Additionally, profit and loss from futures is also reported on Form 1099-B.
Proceeds from Broker and Barter Exchange Transactions:
1099B reporting is made up of four separate forms:
All of the 1099-B forms contain the same boxes, however not all of the boxes are used on every form.
Box 1b reports the date the security was acquired. For short sales the date of acquisition of the security used to cover the short position is reported. Box 1b will be blank for noncovered securities.
Box 1c reports the date of sale or exchange for the security. For short sales the date shown is the date the security was delivered to close the short sale.
Box 1d reports gross proceeds, less commissions and fees, of sales and short sales of stocks and bonds, other debt obligations, commodities, forward contracts, mutual funds and other securities. This amount may also be adjusted for certain related options positions.
Box 1e reports cost or other basis of securities sold. This basis may be adjusted for wash sales, related options positions, and corporate actions. Box 1e is not used for reporting sales of uncovered securities as cost basis is not reported for these sales.
Box 2 indicates whether the gain or loss is long-term or short-term.
Box 3 will be, checked for covered securities.
Box 4 is the amount of federal income tax withheld from the sale proceeds, if any.
Box 5 will be checked for non-covered securities.
If Box 7 is checked the any loss from a change in control or other capital change cannot be taken on your tax return. Please consult your tax advisor if this box checked
Boxes 8,9,10 and 11 is the aggregate profit or loss of lines 8, 9, and 10 on regulated futures contracts (and options on futures contracts) commonly referred to as Section 1256 transaction for the year. Refer to Form 6781 and Instructions for guidance on how to report these boxes.
|Covered Securities||Uncovered Securities|
|Broker/dealers vs. Taxpayer Responsibility||Broker/dealers report cost basis to IRS and taxpayer on Form 1099-B. Taxpayer will use Form 1099-B data to prepare their tax returns||Taxpayer to maintain and report cost basis to IRS.|
|Equities||Acquired on or after January 1, 2011||Acquired prior to January 1, 2011|
|Mutual funds||Acquired on or after January 1, 2012||Acquired prior to January 1, 2012|
|Fixed income and options||Acquired on or after January 1, 2014||Acquired prior to January 1, 2014|
|Publicly Traded Partnerships||Taxpayer to maintain and report cost basis to IRS|
Form 1099-MISC reports substitute payments in lieu of dividends and tax-exempt interest received in your account, gross fee income received by advisors, stock loan fees received, and soft-dollar payments.
Line 2 Royalties: Payments of Royalties are generally from investments in natural resource companies.
Line 3 Other income: Stock loan fees earned.
Box 7: Reports gross fee income received by advisors: Fees earned by advisors – note that for these types of payments 1099 MISC forms are issued on January 31st.
Line 8 Substitute payments in lieu of dividends and interest (PIL): Substitute payments of interest and dividends. These payments replace the normal interest or dividend payment when your security is lent.
Details for fee income received by advisors and brokers and stock borrow fees paid can be found in your Annual Statement. Details for payments in lieu of dividends or tax-exempt interest and addition information on Margin interest paid are included in your year-end Dividend Statement.
Form 1099-R reports distributions from Traditional, Roth, SEP and Rollover IRAs held at IBKR. The IRA’s trustee/custodian issues these forms on or before 1/31 annually for the prior year. For a complete description of Form 1099-R, refer to the instructions for Form 1099-R and 5498 at www.irs.gov.
Box 1 reports the total amount you received this year. If you have a Traditional IRA, the full amount on line one may not be taxable, refer to form 8606 and the instructions for this form for more information.
Box 2a reports the amount of your distribution that may be subject to federal income tax. Box 2b indicates the taxable amount is not determined. It is your responsibility to determine the taxable amount.
Box 2b indicates if the distribution was for the full value of the account.
Box 4 is the amount of federal income tax withheld from your distribution.
Box 7 identifies, by code, the type of distribution you received and if the distribution is from a Traditional, SEP or SIMPLE IRA. Some of the more common IRS codes are listed below.
Box 12 reports the amount of state tax withheld.
Box 13 identifies the state for which tax, if any was withheld, and provides the state identification number for IBKR.
|1||Early distribution, no known exception (in most cases under age 59.5)|
|2||Early distribution, exception applies (under age 59.5)|
The IRS requires the trustee/custodian of an employer-sponsored retirement plan (401(k), 403(b), 457(b), or annuity) to report a direct rollover to a Traditional IRA as a distribution on Form 1099-R.
A transfer of funds in your traditional IRA from one trustee/custodian directly to another is not considered a rollover. There is no distribution to you and the transfer is tax free. Because it is not a rollover, it is not affected by the 1-year waiting period required between rollovers. Trustee-to-trustee transfers are not required to be reported on Form 1099-R.
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.
Box 11 on the form indicates that you must take a required minimum distribution (RMD) for all years after you have attained age 70 1/2. If you attained 70 1/2 years of age 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. Additionally if you are the beneficiary (non-spouse) of an inherited IRA you must also tax a RMD in the following year.
Owners of traditional IRAs may also direct that their RMD (up to $100,000) for a year be paid directly to a charity. You will still receive a 1099R if this is the direction you have given. Please consult your tax advisor.
Your IRA's trustee/custodian must distribute 5498s to participants and the IRS no later than May 31 of each calendar year. The timing of this form is a result of contributions for the prior year may be made up to the filing date of your income tax return (generally April 15).
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: some RICs and REITs do not have calendar fiscal years, please check detail on the website of the investment).
Box 1a reports the total undistributed long-term capital gains, including the amounts in Boxes 1b, 1c and 1d. For individuals, this amount is reported on your IRS Form 1040, US Individual Income Tax Return, Schedule D, Capital Gains and Losses.
Box 1b reports the Section 1250 unrecaptured gain, and is your allocable portion of the amount included in Box 1a that has been designated as unrecaptured section 1250 gain from the disposition of depreciable real property. For individuals, this amount is entered on your unrecaptured Section 1250 Gain Worksheet. Box 1c reflects Section 1202 gain; and Box 1d reflects the collectibles (28%) gain.
Box 2 contains any Federal Income tax paid by the RIC or REIT on this gain in your behalf.
When the fund has paid a tax on the capital gains (Box 2, Form 2439), you are allowed a credit for the tax as it is considered paid by you. You can take this credit on Form 1040 for the amount of tax paid shown on in Box 2. Copy B of Form 2439 should be attached to or scanned for E-filing with your return.
The undistributed capital gains reported on Form 2439 should be reported in addition to any capital gains reported on Form 1099-DIV. Please see details in IRS Publication 550 for reference.
The report details all dividends, payments in lieu of dividends, and return of capital as well as any tax withholding on these amounts paid into your account during the year. Additionally, all dividends reported are summarized by revenue type (regular vs. qualified) to make year-end tax reporting easier. The dividend report is provided for all clients. Dividends will be reported in the base currency of the account.
US clients should reconcile the dividend report with your Form 1099-Div in the consolidated 1099. For U.S foreign tax credit reporting, dividends are also summarized by source country.
In general, the dividend report is available on or before February 15.
Worksheet Form 8949 Worksheet, Sales and Other Dispositions of Capital Assets Worksheet applies to individuals, trusts, and partnerships. Form 8949 Worksheet reconciles amounts that were reported to you and the IRS on Form 1099-BFor worksheets detailing covered securities (Box A and Box D) these should be the amounts you report on your tax return. However, this report is account specific.
The Form 8949 worksheet shows trade details for all securities (stocks, options, single stock futures and bonds). Taxpayers report transactions on Form 8949 under one of six categories:
The IBKR 8949 worksheet reports transactions in this format. All attempts have been made to tie the information on these worksheets to your Form 1099-Bs; however discrepancies may exist. For accuracy of information on the Form 8949 worksheet, please review your trading records or consult your tax advisor.
Transactions are paired (sells matched with buys) according to the tax basis declaration method selected in Account Management or Client Portal at time of sale, or using the IBKR Tax Optimizer lot selection designated at the time of the trade. FIFO is the default methodology. All cost basis include commissions. All proceeds are reported net of commissions.
The worksheet for Form 8949 provides details for both covered and noncovered securities. The details may include information not reported on Form 1099-B and adjustments and explanations where the information required to be reported on Form 1099-B differs from actual tax reporting. Explanations are provided using a letter code. For example:
Additional information for owners of Widely Held Fixed Investment Trusts (WHFITs) is reported on a separate tax information statement. WHFIT securities include unit investment trusts, royalty trusts, commodity trusts and HOLDRS trusts. IBKR is required to report all income from WHFITs gross on Forms 1099 to the IRS and to you. In many cases this amount will be more than the actual cash received in your account. In some cases, income may be reported on Form 1099 when no cash distribution was made from the WHFIT. The IRS requires that income be reported in the gross amount, including any expenses deducted by the WHFIT prior to a payment. Income (and expenses) must also be reported based on when it was received or incurred by the WHFIT, and not when it is distributed to shareholders.
The WHFIT tax information statement shows the gross amount reported to you on Forms 1099 (dividends, interest, OID, royalty or principal amounts) as well as expenses, including investment interest, foreign taxes and investment expense that have been withheld by the WHFIT from your payments.
For royalty and commodity WHFITs, only the gross income amounts and net income amounts are reported. For tax information on these WHFITs visit the website for the particular WHFIT security.
The WHFIT Tax Information Statement will be available by March 15 for the immediately preceding tax year. View and print the statement by accessing IB’s website, selecting Account Management or Client Portal from the Login menu and opening Tax Forms in the Report Management menu or the Reports menu.
The NR4 reports Canadian Source income paid to a non-resident of Canada during the year from which Canadian tax has been withheld by IBKR. The value of Canadian payments reported on your NR4 may differ from the total value of distributions that are shown on your account statements due to return of capital distributions, which are not required to be reported on an NR4, in accordance with Canadian taxation laws.
Investment income including dividends, interest, Canadian unit trust income, mutual fund distributions and capital gains paid by Canadian securities to nonresidents are reported in box 16 or box 26. Canadian tax withheld is reported in box 17 or 27
Canadian tax is generally withheld at 30%, however a tax treaty may lower this rate.
If you are a US citizen, your Consolidated 1099 from Interactive Broker (IB) includes Canadian dividends and tax withheld.