Quick overview

Accurate reporting of investment income requires matching the information the IRS receives from brokers and payors with what you enter on your Form 1040. Common incoming documents (1099 series and broker statements) feed several tax forms and schedules that summarize and calculate tax on dividends, interest, capital gains and special categories of income.

Below I list the main IRS forms you’ll encounter, explain when each applies, and give practical filing tips I use in client work to reduce mistakes.

The core forms you’ll see and when to use them

  • Form 1099 series (issuer reports to you and the IRS)

  • 1099-DIV — Dividends and distributions. Brokers and corporations send this for ordinary dividends, qualified dividends, and certain capital gain distributions. (See IRS: About Form 1099-DIV.)

  • 1099-INT — Interest income from banks, brokers, and payors. Includes taxable interest and tax-exempt interest reporting. (See IRS: About Form 1099-INT.)

  • 1099-B — Proceeds from broker and barter exchange transactions. Most stock and mutual fund sales appear here; details include gross proceeds, cost basis (if reported), and whether the sale is short- or long-term. You’ll use this information on Form 8949 and Schedule D. (See IRS: About Form 1099-B.)

  • 1099-R — Distributions from pensions, IRAs, annuities, and retirement plans.

  • 1099-S — Proceeds from real estate transactions, when applicable.

  • 1099-K — Third-party network transactions and some crypto marketplace activity may issue a 1099-K; generally not used for most investment sales but can show up for marketplace sales.

  • 1099-MISC / 1099-NEC — Rarely used for standard investment income but can report miscellaneous payments or nonemployee compensation tied to investment activities.

  • Form 8949 — Sales and other dispositions of capital assets

  • Use Form 8949 to report each sale of capital assets (stocks, bonds, crypto sales, etc.) that requires adjustments, such as wash sale adjustments or when the broker did not report basis to the IRS. You must report each transaction on 8949 unless your broker reports the basis and no adjustment is needed. After completing Form 8949, totals flow to Schedule D. (See IRS: About Form 8949.)

  • Schedule D (Form 1040) — Capital gains and losses summary

  • Schedule D summarizes the totals from Form 8949 and calculates your net capital gain or loss for the tax year. Short-term gains are taxed at ordinary rates; long-term gains have preferential rates. (See IRS: About Schedule D.)

  • Schedule B (Form 1040) — Interest and ordinary dividends

  • Required when your combined interest and ordinary dividends exceed $1,500 or when you have certain foreign accounts, or if the IRS requires more detail. It’s a simpler way to aggregate many 1099-INT and 1099-DIV items for Form 1040.

  • Form 8960 — Net Investment Income Tax (NIIT)

  • If your modified adjusted gross income (MAGI) exceeds the statutory thresholds ($200,000 single; $250,000 married filing jointly), you may owe a 3.8% NIIT on net investment income. Report NIIT on Form 8960. (See IRS: Form 8960.)

  • Form 4952 — Investment interest expense deduction

  • If you paid interest on loans used to buy investments, use Form 4952 to figure the deductible portion of that interest. This can reduce taxable investment income but has limitations.

  • Form 8938 and FBAR (FinCEN Form 114) — Foreign assets and accounts

  • If you hold foreign financial assets above reporting thresholds, file Form 8938 with your return. Separately, if you have foreign bank accounts with aggregate balances over $10,000 at any time during the year, you must file a FinCEN Form 114 (FBAR). These rules are separate from standard 1099 reporting and carry significant penalties when ignored. (See IRS: Form 8938 and FinCEN: FBAR guidance.)

Special cases and other forms to watch

  • Retirement distributions and rollovers — Form 1099-R

  • Rollovers, conversions, and taxable IRA distributions appear on 1099-R. A taxable distribution flows to Form 1040 and possibly to Form 5329 for early distribution penalties.

  • Real estate sales — Form 1099-S and Schedule D

  • Sales of real estate may trigger Form 1099-S reporting. If the sale produces a capital gain, report it on Form 8949 and Schedule D, unless an exclusion or special rule applies (for example, the primary residence exclusion). (See IRS: About Form 1099-S.)

  • Cryptocurrency

  • The IRS treats virtual currencies as property. Report sales and exchanges on Form 8949 and Schedule D. You may receive a 1099-B, 1099-K, or a specialized statement from exchanges; reconcile these to avoid double counting. Review IRS guidance on virtual currency reporting.

Step-by-step filing checklist I use with clients

  1. Gather all issuer documents: 1099-DIV, 1099-INT, 1099-B, 1099-R, 1099-S, and 1099-K if supplied.
  2. Match broker 1099-B lines to your trade confirmations and year-end broker statement. Verify reported basis — brokers report basis only when they have accurate cost information.
  3. Prepare Form 8949 for each sale needing adjustments (wash sales, missing basis, acquisitions in prior years) and subtotal by short- and long-term categories.
  4. Transfer totals from Form 8949 to Schedule D and compute your net capital gain or loss.
  5. Complete Schedule B if required; report ordinary dividends and interest on Form 1040.
  6. Evaluate NIIT (Form 8960) if your MAGI is above the threshold.
  7. File Form 8938 and FBAR if you meet foreign-asset reporting thresholds.
  8. Keep detailed supporting records (trade confirmations, cost-basis worksheets, brokerage year-end statements) for at least 3–7 years depending on the item.

Common filing mistakes and how to avoid them

  • Mismatched basis: Brokers don’t always have correct cost basis. Reconcile your records and correct basis before filing. If you file wrong basis and it’s later corrected by a broker, you may need to file an amended return.
  • Ignoring Form 8949: Don’t skip Form 8949 when required — it’s the IRS’s primary detail record for asset sales.
  • Overlooking wash sales: Short-term losses disallowed by wash-sale rules must be adjusted on Form 8949 and carried into basis of repurchased shares.
  • Missing foreign reporting: FBAR and Form 8938 failures carry heavy penalties; treat these separately from typical 1099 reporting.
  • Double counting crypto: Aggregate forms like 1099-K can overstate gross proceeds; reconcile exchange records and only report correct sales/exchanges once.

If you don’t receive a 1099 or a broker statement

You are legally responsible to report all taxable income even if you don’t receive a 1099. Contact the issuer first; if you can’t obtain a corrected form in time, use your own records to report the income and retain correspondence proving your attempts to obtain the form.

Documentation to keep

Keep purchase dates, cost basis, trade confirmations, year-end brokerage statements, dividend reinvestment records, and any adjustments (reorganizations, wash sales). For corporate actions and mergers, retain the broker notices showing how basis was adjusted.

Practical tax-planning tips

  • Harvest losses to offset gains, but watch the wash-sale rule. Planning tax-loss harvesting intentionally at year-end often reduces next year’s taxable gains. See our deeper coverage on capital gains strategies for timing and harvesting for more detail: Capital Gains Tax: Strategies to Minimize It.
  • Use specific-identification lot methods when selling partial holdings to manage gains; accurate lot accounting can materially lower tax bills. Learn more about optimizing tax lots here: Optimizing Tax Lots to Minimize Capital Gains.
  • Review investment interest expense rules before claiming deductions — improper deductions attract audits.

Final checklist before you file

  • Do totals on Schedule D match the sums on Form 8949 and 1099-B?
  • Did you include all required Schedule B, Form 8960, Form 4952, Form 8938 or FBAR if applicable?
  • Are foreign gains and dividends reconciled and properly reported?
  • Have you checked for wash sale adjustments?

Where to find official guidance

Professional note and disclaimer

In my practice advising investors over 15 years, the most common root cause of IRS inquiries is mismatches between broker-reported information and taxpayer returns. Reconcile statements early and keep solid documentation. This article is educational only and not a substitute for personalized tax advice — consult a CPA or tax attorney for your specific facts.

If you want a tailored checklist or a sample basis-tracking worksheet I use with clients, I can point you to templates or sample workflows used by tax professionals.