Tax Reporting: Return of Capital (ROC) in an Account
IB will report ROC distributions to shareholders as nontaxable distributions on Form 1099-DIV, "Dividends and Distributions". Please note that this information is often not available until after the initial 1099 forms are made available to you. Once the information is available IB will issue corrected 1099s to you. We suggest that you check your tax forms in Account Management – Tax Forms prior to filing your return to verify that you have used the most current information.
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: U.S. Government Interest on Form 1099-INT
U.S. Government interest is reported separately for state tax reporting purposes.
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: If You Filed Taxes but Did Not Include Information Reported on Form 1099
You will have to file an amended tax return that includes the applicable information as reported on Form 1099. As the IRS verifies the information on your tax returns with the 1099s received from banks, brokers and other sources, you may receive a notice from the IRS indicating that your return was filed without the omitted information. Consult your tax or legal advisor for further information.
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 2439
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 that some RICs and REITs do not have calendar fiscal years, it is best to consult the website of the investment or your tax advisor for specific guidance in this area.
Tax Reporting: Reporting 1099 Information to the IRS
IB sends an electronic file to the IRS with the same information that was reported to you on Forms 1099.
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-DIV tax information
Generally, individual investors will need to report Form 1099-DIV information on IRS Form 1040, "U.S. Individual Income Tax Return." Depending on the type of information reported on your Form 1099-DIV, you may need to include with Form 1040 additional forms such as Schedule B, "Interest and Ordinary Dividends" Schedule D, "Capital Gains and Losses." and/or Form 1116, "Foreign Tax Credit." All IRS forms are available online free of charge at www.IRS.gov/formspubs or by calling the IRS at 800.829.3676 (800/TAX FORM).
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: Profit or Loss Realized for Closed Contracts on Form 1099 for Noncovered Securities
Profit or Loss Realized for Closed Contracts on Form 1099 for Noncovered Securities is the aggregate profit or loss recognized over the course of the year from transactions in commodity futures and regulated futures contracts which have been closed, reached final settlement or, in the case of options, expired.
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.
W8 Re-certification
If you are not a U.S. citizen or entity formed within the U.S. and have an account with Interactive Brokers, you are requested to declare your citizenship or country of formation with the US tax authority (IRS). This declaration can be done online by correctly filling out the W-8BEN form. Filling out this form is an easy process that only takes a few minutes. In the short movie below, we show you where to find the W-8BEN in your IB account management and how to fill it out.
If you fail to declare your foreign citizenship or country of formation, and IB does not have a valid W-8BEN form on file, you are presumed to be a US person/entity without a proper tax certification. As a US person/entity, you will be subject to backup withholding at a rate of 28% on interest, dividends, and substitute payments in lieu; as well as gross proceeds.
Every 3 years the IRS requires a re-certification of the W-8BEN form. IB will ask the beneficial account owner to re-certify their foreign status by re-signing the W8-BEN in order to continue their status as a foreign person and claim the tax treaty benefits. If you experience any problems or have questions regarding the W-8BEN form or how IB handles Non-US persons and entities, select this Tax Information and Reporting link and choose the tab Non-US Persons and Entities or consult the following IRS information page for more details: www.irs.gov/instructions/iw8/ch02.html
IRA: Tax Reporting
The Internal Revenue Service (IRS) requires certain transaction reporting within the IRA
Tax forms for eligible accounts will be published by January 31 (Form 1099-R) and by May 31 (Form 5498). These forms display the IRA distributions and IRA contributions made for the previous tax year.
Select from the following for additional information.
What To Expect
IRA tax forms do report: deposits, withdrawals, rollovers, conversions, recharacterizations, year end fair market value, and US tax withholding from withdrawals.
IRA tax forms do not report: cost basis, sale proceeds, payments-in-lieu, dividends, credit interest, debit interest, foreign tax withholding, and trustee-to-trustee transfers.
Reconciling Transactions
Your Interactive Brokers monthly and annual activity statements list all IRA cash deposits and withdrawals, as well as broker-to-broker asset transfers via ACATS. The account statements provide the NAV for each transaction. Contribution and distribution tax years and codes do not appear on the activity statements.
In order to obtain specific IRA contribution/distribution designations, contact Client Service by Chat or Inquiry/Trouble Ticket via Account Management.
IRA Tax Corrections
Tax correction requests for open IRAs must be received in writing to Interactive Brokers, not Equity Trust Company, through the secure Inquiry/Trouble Ticket via Account Management.
For closed IRAs, we kindly ask you to submit correction request using the form available on our website through our Messaging System.
Understanding Form 1099-R
The IRS requires that any distribution or cash withdrawal taken in the prior year be reported by the account's administrator. This form reports the IRA distributions made from each IRA account type.
Data displayed is received from the withdrawals, conversions, and recharacterizations in your IRA. This may include money distributed to another tax-deferred account as a rollover, conversion, or recharacterization.
For explanations about each line item on the form, read the instructions for Participants or contact IB's Customer Service.
Understanding Form 5498
The IRS requires that any contribution or cash deposit received in the prior year be reported by the account's administrator. This form reports the IRA contributions made from each IRA account type. Generally, the tax form is published by May 31, but may be issued no later than June 30.
The data shown on the form includes the following:
- Prior Calendar Year's December 31 Fair Market Value
- Prior Year's Contributions
- Prior Year's Rollover Deposits
- Prior Year's Roth Conversions
- Prior Year's Recharacterizations
- SEP Contributions made in the Prior Year
For explanations about each line item on the form, read the instructions for Participants or contact IB's Customer Service.
Click here to return to the Retirement Account Resource page.
Disclaimer: IB does not provide tax advice. 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 international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a q
