Certain investments are prone to annual income reclassification and other adjustments by their issuer, oftentimes after the original tax statement has been issued for your account. When this occurs, an amended tax statement will be issued.
Income reclassification means that a potion or all of the income distributed to investors during the tax year has been subject to a change in tax character or treatment. Examples of this are as follows:
- Real Estate Investment Trusts (REITs) - reclassification often occurs due to adjustments for depreciation and/or gains or losses from sale of property;
- Unit Investment Trusts (UITs) - UITs taxed as grantor trusts commonly reclassify income relating to return of capital, qualified dividends, short-term vs. long-term capital gains, original issue discounts, interest, fees and expenses.
- Mutual Funds - reclassification can occur if the fund distributions during the year exceeded earnings or if the fund holdings included securities subject to reclassification (e.g., tax-exempt mutual funds, REITs).
IBKR also offers tax-advantaged account types for clients who are U.S. citizen, such as IRA accounts. Please click here to learn more about these account offerings.
Additional Information
- Return of Capital (ROC) distributions in the IBKR Knowledge Base.
- What should I do if I receive an amended Form 1099?