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Brokerage firms do not receive final tax distribution information for some securities until after February 15, so Consolidated 1099 Tax Statements sent to holders of these securities prior to Edward Jones receiving this final data are marked "Figures Not Final." We may still be waiting for final allocation information from some issuers of mutual funds, REITs, CMO/REMICs and certain foreign securities. Your 1099 is final, to the best of our knowledge, when “Figures Are Final” is displayed under the Edward Jones logo and above your address. You may want to consider this when making an appointment with your tax professional.
The IRS deadline to issue Consolidated 1099 Tax Statements is February 15. Due to mail time, however, you may receive it sometime after February 15. With Edward Jones Online Access, you can access your tax forms online as soon they are final.
“Covered” and “noncovered” describe whether securities are covered by certain cost basis reporting regulations. When covered securities are sold, we are required to report cost basis on the investor’s year-end Form 1099-B. The following security types are covered by the regulations:
Any securities purchased before the applicable effective dates above are considered "noncovered." Edward Jones will not report cost basis to the IRS for noncovered securities regardless of when they are sold, but we will provide it on your copy of Form 1099-B if we have the information.
Brokerage firms report gross proceeds received from the disposition of securities to the IRS on Form 1099-B. Dispositions may include sales, redemptions, exchanges called bonds and returns of principal. Report each transaction as explained in the instructions for the relevant IRS form, generally Form 8949 and Form 1040, Schedule D for individuals. Usually you must provide the date acquired, date of sale or exchange, CUSIP, quantity, proceeds, cost basis, resulting gain/loss and holding period for each security sold or exchanged.
The cost basis of a sold security is generally the total amount invested in the security, including purchases, commissions, reinvested dividends and capital gain distributions, adjusted for any sales, mergers, splits, spinoffs or returns of principal.
For domestic open-end mutual funds, Edward Jones uses the average cost method to calculate cost basis. If a mutual fund position is made up of both noncovered and covered shares, then two average costs per share will need to be used - one for the noncovered shares and one for the covered shares.
For equities, Edward Jones uses the first-in, first-out cost method unless there were uncosted shares or it was indicated at the time of the sale that specific shares were being sold. If there were uncosted shares at the time of the sale and specific identification was not used, the uncosted shares will be sold first.
If the security was purchased and held at Edward Jones and tracked by our cost system, we will provide the cost basis of the sold security on your Form 1099-B.
Capital gain distributions are generally earned when a mutual fund manager sells a security within the fund portfolio for a gain. The annual net gain recognized from sales within the fund is passed through to shareholders, usually late in the year, and is reported on Form 1099-DIV. Long-term gain distributions are listed in Box 2a, Total capital gain distributions, while short-term gain distributions are included in Box 1a, Total ordinary dividends. The amount of time the fund portfolio held the shares – not how long the individual held shares of the mutual fund – determines whether the gain is considered long-term or short-term.
The IRS requires brokerage firms to report tax-exempt interest on Form 1099-INT and exempt-interest dividends on Form 1099-DIV. While this income may not be subject to federal income tax, it may impact the amount of Social Security benefits subject to tax. Please consult with your tax professional regarding how to report this income.
The main difference between qualified and non-qualified dividends is how the IRS applies the method of taxation. Qualified dividends are taxed at the same rate as long-term capital gains while non-qualified dividends are taxed at the taxpayer's ordinary income rate. Dividends from equities, traditional preferred stocks, stock funds and foreign stocks that trade on a U.S. exchange may qualify for the reduced rate.
The percentage of qualified and non-qualified income from mutual funds is based on the underlying assets within the fund portfolio. Generally, most distributions from stock funds are qualified, most distributions from bond funds are non-qualified and balanced fund distributions are a mixture of qualified and non-qualified income (i.e. "partially qualified").
You may be able to claim a credit or take a deduction on your tax return for taxes withheld and paid to a foreign country. For amounts withheld in excess of the foreign tax withholding treaty rate, you generally need to submit a request for a refund to the foreign taxing authority. Each country has different filing requirements. Contact your qualified tax professional for more information.
On various occasions, a client may receive income in an Edward Jones account that needs to be reported to another taxpayer. This often occurs when:
If the income is that of another taxpayer and not that of the primary account holder, the primary account holder may need to issue a Form 1099 to the actual owner of the income using a process called nominee reporting. Please consult with your tax professional for assistance with nominee reporting.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. This content should not be depended upon for other than broadly informational purposes. Specific questions should be referred to a qualified tax professional.
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