In the previous post in my 1099 explained series, we took a look at 1099-DIV. Which is the 1099 that is specifically related to dividend distributions. For most people their 1099-DIV comes from their broker around mid March in a “all in one” 1099 statement. Today we are talking about 1099-B, which accounts for brokerage proceeds and barter and exchange transactions proceeds. However due to the fact that bartering is extremely uncommon, we will mostly focus on the “brokerage” part of the 1099-B.
So what is a 1099-B and who gets one?
As it says on the right side of the form, the 1099-B is for Proceeds from Broker and Barter Exchanges. In the vast majority of cases this form is issued for brokerage transactions, which in layman terms, are proceeds from trades. Unlike most forms, there isn’t a minimum requirement to file, in fact if you’ve made any trades your broker will put this form together and issue it to you. In most cases 1099’s are due to be sent to the recipients by February 1st (in 2021). However, since a 1099-B is a consolidated form, it actually is due by February 16th. But in any case once you receive this form, be sure to save it for your accountant.
How does 1099-B affect my taxes?
Being that 1099-B is specifically for brokerage transactions (and barter transactions as well). The form itself has all the staples that other 1099 forms do. Including payor and recipient information, state tax withholding and federal withholding. Other boxes not related to brokerage sales include bartering income, and information on contracts.
Now the rest of the boxes are all related to the sales of securities, stocks for the lay person. These boxes including accounting for sale price, cost basis, indicating whether a stock is long term or short term, and also indicating if the security was covered or non covered. However filing a 1099-B for every security transaction is a bit tedious. And because of this, brokerages issues a consolidated 1099. In most cases these 1099’s differentiate between short and long term, and covered and non covered transactions. These amounts should be summed up if they are covered transactions and inputted onto Form 8949 based on their specific category. If they are non-covered you would still use Form 8949. However in most cases it’s best to list out each transaction on the form.
Conclusion
In conclusion form 1099-B may seem like a complicated form and in most cases it is. However one good thing is that in most cases your brokerage house will prepare the bulk of this form for you. This is great because all one needs to do is save the consolidated 1099 that they receive. This 1099 should be given to a qualified accountant. This will assure that Form 8949 is filled out correctly and efficiently.