Form 1099 provides information on the taxable income you receive. Because income can come from different sources, the IRS groups it into different categories. The various categories have specific 1099 forms associated with them.
For the 2018 tax year, there are 20 different versions of Form 1099. Depending on your circumstances, you could receive five to 10 various 1099s in any given year.
Investment income, like income in general, can come from different sources. The following are some of the primary investment-related income categories and the associated 1099 forms that you may receive.
What the IRS classifies as “income” might not necessarily seem like income to you. But if the IRS considers it taxable, you’ll receive a Form 1099 that reports it. For example, if you purchased a bond for less than its face value or principal amount, you’ll receive Form 1099-OID. OID stands for "original issue discount." OID is the difference between the amount you would receive when the bond matures and the issue price. Generally, you must claim part of the OID as interest income each year that you hold the bond whether you receive the payment or not.
If a lender agrees to forgive a portion of what you owe them, the IRS considers that as income. Form 1099-C is the form that the lender reports the amount forgiven — and upon which you must pay taxes. There’s also Form 1099-Q, which reports distributions, including transfers to another financial institution, from education savings accounts (ESAs) and 529 accounts.
There’s one other form related to income you may receive if you’re an investor. The IRS allows investment firms to issue consolidated reporting statements, which include all applicable 1099 forms. They may include 1099-INT, 1099-DIV, 1099-B, 1099-OID and/or 1099-MISC.
With the exception for Form 1099-B and the Consolidated Tax Statement, you should receive your 1099 forms by January 31, 2019. For Form 1099-B and Consolidated 1099 Tax Statements, the IRS requires brokerage firms to mail or electronically deliver them by February 15.
It’s important to note that for some security types, final tax information from the bank, institution, or other type of issuer may be received after the standard deadline. As a result, your final consolidated statement may not arrive by the February date. In these cases, your final 1099 Consolidated Tax Statement will be mailed between March 1- 15, 2019.
Once you’re clear on which 1099 forms you’ll be receiving, as well as the other forms you’ll need, get organized.
Don’t feel you have to go it alone. Consult with a tax advisor or other financial consultant for information specific to your tax circumstances. If you’re in the market for a financial advisor, it may be worthwhile to find one that also handles taxes to help ease next year’s tax preparation. Use the LPL Find an Advisor tool to find an advisor in your area.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.