How to read your 1099 tax form

Your consolidated 1099 combines several IRS forms into one document. Here's what each section reports.

1099-B: Proceeds from sales (Instructions for Form 1099-B)

This section covers any securities you sold during the year. For each sale, you'll see:

• A brief description of what was sold
• Proceeds: The gross amount received from the sale
• Cost basis: What you originally paid for the position
• Wash sale loss disallowed: If a loss was disallowed under the wash sale rule, the amount appears here
• Whether the sale was short-term or long-term

1099-DIV: Dividends and distributions (Instructions for Form 1099-DIV)

This covers income your investments paid out during the year. You'll receive this section once your total reportable dividends reach $10, and it can include:

• Total ordinary dividends: Includes dividends from individual stocks as well as money market funds
• Qualified dividends: A subset of your ordinary dividends that may qualify for a lower tax rate
• Capital gain distributions: Gains passed through to you from a fund, separate from any gains you realized yourself by selling
• Nondividend distributions: Also called return of capital, this reduces your cost basis rather than being taxed immediately
• Exempt-interest dividends: Dividends from tax-exempt funds

1099-INT: Interest income (Instructions for Forms 1099-INT and 1099-OID)

This covers interest income, split into three boxes based on the source, each taxed a little differently. You'll receive this section once your total interest across these boxes reaches $10:

• Box 1, Interest income: Ordinary interest, taxed at both the federal and state level
• Box 3, Interest on U.S. Treasury obligations: Interest from Treasury holdings. This is taxable federally, but exempt from state and local income tax
• Box 8, Tax-exempt interest: Interest from municipal bonds, generally exempt from federal tax (and from state tax too, if the bond was issued in your state)

1099-MISC: Miscellaneous income (Instructions for Forms 1099-MISC and 1099-NEC)

This section can include a few different types of income:

• Royalties: Reported once they reach $10
• Substitute payments in lieu of dividends or interest: This applies if you participate in Frec's securities lending program. Payments received in place of a dividend on a lent-out security are reported here rather than on the 1099-DIV, once they reach $10
• Other income: Miscellaneous income not covered elsewhere on the form, reported once it reaches $2,000

Frec doesn't provide tax advice, and encourages you to seek assistance from a tax advisor or other tax professional for questions specific to your situation.