Introduction
The 1099-B tax form is a crucial document for investors and traders. It reports proceeds from the sale of stocks, bonds, options, mutual funds, and cryptocurrencies. Brokerage firms and cryptocurrency exchanges must issue 1099-B forms to individuals who sell taxable assets. Understanding this form helps taxpayers properly report capital gains and losses to the IRS and avoid potential tax penalties.
For investors and cryptocurrency traders, tax reporting can be complex. Many traders engage in frequent buying and selling of assets, sometimes across multiple platforms. Without a clear understanding of the 1099-B form, taxpayers may inadvertently misreport their earnings, leading to potential audits, penalties, or overpayments. This guide will break down everything you need to know about the 1099-B form, how it works, and how to report your investment income accurately.
Who Receives a 1099-B Form?
Individuals receive a 1099-B form if they sell:
- Stocks, ETFs, mutual funds, options, or bonds through a brokerage.
- Cryptocurrency (Bitcoin, Ethereum, altcoins, NFTs, etc.) on an exchange.
- Other taxable investments through a financial institution.
Many traders may wonder whether they will receive a 1099-B if they only purchase assets but do not sell them. The answer is no—this form is issued only when an individual sells or disposes of an investment. However, even if an investor does not receive a 1099-B, they are still required to report all sales transactions to the IRS.
Short-term vs. Long-term Gains
- Short-term gains (held under 1 year) are taxed as ordinary income.
- Long-term gains (held over 1 year) qualify for lower capital gains tax rates.
The tax rates for short-term and long-term capital gains can significantly affect how much tax you owe. Short-term capital gains are taxed at the same rate as your regular income, which can be as high as 37% for high earners. On the other hand, long-term capital gains are subject to a lower tax rate—either 0%, 15%, or 20%, depending on your taxable income.
Who Needs to File a 1099-B?
- Brokerages & crypto exchanges must issue a 1099-B to users who sell investments.
- Individuals receiving a 1099-B must report capital gains or losses using:
- Schedule D (Capital Gains and Losses)
- Form 8949 (Sales and Dispositions of Capital Assets)
One common misconception is that only professional traders or high-volume investors need to report capital gains. In reality, anyone who sells an investment asset for a profit or loss is required to report it. Even small trades, such as selling a few shares of stock or exchanging cryptocurrency for another asset, must be reported to the IRS.
Platforms That Issue 1099-B Forms
Below is a list of platforms that issue 1099-B forms for taxable transactions:
| Platform | Type of Transactions Reported | Who Receives It? |
| Robinhood | Stock, ETF, and options sales | Investors selling securities through Robinhood |
| Coinbase | Cryptocurrency sales | Crypto traders selling Bitcoin, Ethereum, or other assets |
| Binance | Crypto trading transactions | Binance users selling or converting digital assets |
| Kraken | Crypto and staking rewards | Traders and investors using Kraken for transactions |
| Gemini | Crypto asset sales | Users trading on Gemini meeting reporting thresholds |
| E-Trade | Stock, ETF, bond, and options sales | Investors selling securities through E-Trade |
| Webull | Stock and ETF transactions | Webull traders who sold investments during the year |
How to File Taxes with a 1099-B Form
For Recipients:
- Report capital gains/losses on Schedule D.
- Use Form 8949 to itemize individual transactions.
- Track cost basis, acquisition dates, and sale prices for accurate tax reporting.
When reporting capital gains, it’s essential to keep track of the cost basis (the original purchase price of an asset). The IRS allows for several different methods of calculating cost basis, including FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and specific identification. Different strategies can result in different tax outcomes, so investors should consider consulting a tax professional if they are unsure which method to use.
For Platforms Issuing 1099-B Forms:
- File Copy A with the IRS and Copy B to recipients by January 31st.
- Provide accurate cost basis details to help users report taxable events correctly.
Common Mistakes & How to Avoid Them
- Not reporting all sales transactions, even if a 1099-B is missing.
- Ignoring cost basis adjustments, leading to higher tax liabilities.
- Assuming crypto transactions are tax-free—all crypto trades are taxable.
- Failing to report exercised or sold stock options, which are taxable events.
One of the biggest mistakes investors make is assuming that they don’t need to report transactions that did not result in a gain. However, even if you sold an investment at a loss, it is still required to be reported. The IRS allows taxpayers to use capital losses to offset capital gains, and if losses exceed gains, they can deduct up to $3,000 per year against ordinary income (or $1,500 for married individuals filing separately).
When Is the 1099-B Deadline?
- Due to recipients by: February 15th
- Paper filing deadline to IRS: February 28th
- Electronic filing deadline to IRS: March 31st
If you received a 1099-B, it’s important to review the information carefully to ensure it matches your records. Errors in reporting can lead to IRS notices, additional tax liabilities, or even audits. If you find discrepancies, contact the issuing platform immediately to request corrections.
Conclusion
The 1099-B form is essential for stock and cryptocurrency traders to report capital gains and losses accurately. If you received a 1099-B, be sure to review the information carefully, report your transactions correctly, and file your taxes on time.
Investors and crypto traders should also take proactive steps to track their transactions throughout the year. Using tax software, spreadsheets, or crypto tax calculators can make the process easier when tax season arrives. Additionally, if your transactions are complex or involve large sums, consulting a tax professional can help ensure compliance and minimize your tax burden.For additional resources, refer to the IRS website or consult a tax professional for complex investment transactions.