The IRS has introduced new tax forms in the past few years to adapt to industry changes. This includes the 1099-K, to help track online vendors, and the IRS form 1099-B, to monitor funds made from stocks and mutual bonds. But since it’s a relatively new tax form – this is the second year investors could have received one – many are still confused on its implications. So what is a 1099-B form used for?
In an article for the Wall Street Journal, 1099-B forms should have arrived in recipients mailboxes in January from brokers to track the amount earned from investments, adding mutual funds to the list this year to report the total cost basis. Previously, those with stocks could fudge their numbers, which are often hard to remember in the first place, but now the IRS is cracking down – making taxpayers and accountants nervous.
“Advisers did their best to compute basis, sometimes based on a client’s foggy recollection,” the Journal explained. “Every adviser has a war story about how hard it can be to track down basis, especially if shares were a gift, or were bought long ago from a company with a tangled corporate lineage.”
Ideally, with more reporting now, records will be easier to keep and will be less of a worry in the future. But until then, some accountants are fretting since the forms are nearing their due date, especially those that haven’t been recording cost basis as rigidly in the past.
However, this is also the time a broker could invest in a 1099 processing service, especially since these forms are not going away, and instead becoming more intense with additional investments added since the beginning. With an IRS-approved vendor, companies can begin keeping track of their finances in an organized and efficient way.
Tab Service Company is a Chicago based company and the leading provider of 1099 processing services. As an SOC2-approved service organization, we apply industry-best practices to our approach with clients.