Do I Have to Report 1099-B Income? Everything You Need to Know About Broker Statements

The Short Answer: Yes, You Absolutely Must

If you’ve recently sold stocks, bonds, or other securities and received a Form 1099-B from your broker, you might be wondering if you really need to report this on your tax return The simple answer is yes – regardless of whether you made money, lost money, or broke even, you must report these transactions on your tax return

As H&R Block clearly states “Regardless of whether you had a gain loss, or broke even you must report these transactions on your tax return.”

I’ve helped many clients navigate the complexities of investment reporting, and Form 1099-B confusion is incredibly common. Let’s break down everything you need to know about this important tax form.

What Exactly is Form 1099-B?

Form 1099-B, “Proceeds From Broker and Barter Exchange Transactions,” is a tax document that brokers and barter exchanges are required to file with the IRS for each person:

• For whom they sold stocks, commodities, regulated futures contracts, foreign currency contracts, forward contracts, debt instruments, options, securities futures contracts, etc., for cash
• Who received cash, stock, or other property from a corporation that underwent an acquisition of control or substantial change in capital structure
• Who exchanged property or services through a barter exchange

Basically if you sold investments through a broker or participated in a barter exchange you’ll likely receive this form detailing those transactions.

Why You Can’t Just Ignore Your 1099-B

Many people ask me, “Can’t I just ignore this form if I didn’t make any money?” The answer is a firm NO, and here’s why:

1. The IRS already knows about it – Your broker sends a copy of your 1099-B directly to the IRS
2. CP2000 notices – Failing to report can trigger a CP2000 Underreported Income notice
3. Penalties and interest – The IRS will propose additional tax, penalties, and interest on unreported transactions

As TaxAct explains: “You still need to report it on your return because the IRS also received your Form 1099-B, so they know what you should be reporting.”

What Information Appears on Form 1099-B?

Your 1099-B contains critical information that you’ll need to properly report your investment transactions:

• Box 1a: Description of the property (like stock names and number of shares)
• Box 1b: Date acquired (when you bought the investment)
• Box 1c: Date sold or disposed
• Box 1d: Proceeds (the amount you received from the sale)
• Box 1e: Cost or other basis (what you paid for the investment)
• Box 1f: Accrued market discount (if applicable)
• Box 1g: Wash sale loss disallowed (if applicable)

The most important numbers for most people are in boxes 1d and 1e – these determine if you had a gain or loss.

Covered vs. Noncovered Securities: What’s the Difference?

Your 1099-B might distinguish between “covered securities” and “noncovered securities,” which affects how much information the broker provides to the IRS:

Covered Securities

• Stock acquired for cash after 2010 (with exceptions)
• Stock eligible for average basis method acquired after 2011
• Most debt instruments, options, and securities futures contracts acquired after 2013

For covered securities, your broker must report the acquisition date, cost basis, and whether gain/loss is short-term or long-term.

Noncovered Securities

• Securities acquired before the dates listed above
• Securities transferred without a proper transfer statement
• Securities from exempt recipients or foreign intermediaries

For noncovered securities, your broker might not report complete basis information to the IRS.

How to Report 1099-B Transactions on Your Tax Return

When filing your taxes, you’ll report 1099-B information on:

1. Form 8949 (Sales and Other Dispositions of Capital Assets)
2. Schedule D (Capital Gains and Losses)

The process typically follows these steps:

1. Separate your transactions by type (short-term vs. long-term, covered vs. noncovered)
2. Enter each transaction on Form 8949 with the appropriate checkbox at the top
3. Calculate gains or losses for each transaction
4. Transfer totals to Schedule D
5. Include Schedule D with your Form 1040

What If My 1099-B Shows No Taxable Gain or Loss?

Even if your transaction resulted in no gain or loss, you still need to report it! As TaxAct advises:

“If you received a Form 1099-B that should not be taxable, you still need to report it on your return… You can enter the same amounts for sales proceeds and cost or other basis, so that your Form 1099-B gets reported, but the gain/loss is zero.”

For example, if you sold stock for exactly what you paid for it, you’d report the same amount in both the proceeds and cost basis fields.

Common Situations With Form 1099-B Reporting

Scenario 1: Multiple Sales of the Same Security

If you bought shares of the same stock at different times and prices, and then sold some of them, your broker must report each transaction separately. This can get complicated when determining which shares were sold (FIFO, specific identification, etc.).

Scenario 2: Wash Sales

If you sell a security at a loss and purchase a “substantially identical” security within 30 days before or after the sale, that’s considered a wash sale, and you can’t deduct the loss immediately. Your 1099-B will show this in Box 1g.

Scenario 3: Short Sales

For short sales, special reporting rules apply. The sale isn’t reported until the year you deliver securities to close the short sale.

Digital Assets and Form 1099-B

Starting in 2025, there are new rules for digital assets (cryptocurrencies, NFTs, etc.):

• For digital asset sales, brokers complete Form 1099-DA instead of Form 1099-B
• For dual classification assets (assets that are both digital assets and securities), Form 1099-DA is generally used instead of Form 1099-B with some exceptions
• Special rules apply to tokenized securities

What If I Didn’t Receive a 1099-B But Should Have?

If you sold investments but didn’t receive an expected 1099-B:

1. Contact your broker – they should have sent it by February 15
2. Check your online account – many brokers provide electronic versions
3. Report the transaction anyway – you’re still required to report the sale even without the form

Tips for Handling 1099-B Reporting

1. Don’t wait until the last minute – Investment transactions can be complex and time-consuming to report
2. Use tax software or a professional – Most tax software can import 1099-B data directly from major brokers
3. Keep good records – Save confirmation statements showing purchase dates and prices
4. Check for errors – Brokers sometimes make mistakes on cost basis or purchase dates
5. Consider tax loss harvesting – Strategically selling investments at a loss to offset gains

Consequences of Not Reporting 1099-B Income

If you fail to report transactions listed on your 1099-B:

1. CP2000 Notice – The IRS will send a notice proposing additional taxes
2. Penalties – You may face accuracy-related penalties (usually 20% of the underpayment)
3. Interest – You’ll owe interest on the unpaid tax from the due date
4. Audit Risk – Unreported income increases your chances of being audited

Final Thoughts

Reporting your 1099-B transactions is not optional – the IRS already has this information and expects to see it on your return. While it might seem tempting to ignore transactions that resulted in no gain or even a loss, doing so can trigger notices, penalties, and interest.

I’ve seen too many clients face unnecessary headaches just because they didn’t properly report their investment sales. Even if you didn’t make any money on your investments, take the time to report these transactions correctly. Your future self will thank you when you don’t receive that dreaded CP2000 notice in the mail!

Remember: When it comes to 1099-B reporting, it’s not about whether you owe tax – it’s about properly reporting all transactions that the IRS already knows about.