When you trade stocks or earn dividends, you may receive information returns from your broker. Two key forms are Form 1099-B and Form 1099-DIV, which report investment transactions to you and the IRS.

Form 1099-B covers the sale of capital assets (stocks, bonds, crypto, etc.), while Form 1099-DIV reports dividend income and certain fund distributions. Getting these forms is important because they ensure your investment income is reported correctly on your tax return. 

What Are IRS 1099 Forms?

The IRS has many “1099” forms to report income outside of wages. Form 1099-B and Form 1099-DIV are used by financial institutions to report investment income.

• Form 1099-B – Reports proceeds when you sell stocks, bonds, options, or similar assets through a broker or barter exchange.  

• Form 1099-DIV – Reports dividend income and capital gain distributions from stocks, mutual funds, REITs, and similar investments 

These forms help the IRS match what brokers report with what you report on your return. 

Form 1099 – B: Reporting Capital Gains and Broker Transactions

Who Receives a 1099 – B?

You’ll get a 1099-B if a brokerage or barter exchange sells assets on your behalf. Practically speaking, this includes anyone who sold stocks, bonds, cryptocurrencies, or other securities through a broker or trading platform.

Barter exchanges, networks where businesses trade goods or services, also issue 1099-B when property is exchanged. For each sale, brokers report the transaction to you and the IRS.

Even if you are a freelancer or small business owner, any investment sales can trigger a 1099-B.

What Information Is Reported on Form 1099 – B?

Form 1099-B details each transaction’s proceeds and cost basis. Key fields include:

• Gross proceeds (Box 1d): Total sales price before commissions. 

• Date of acquisition (Box 1b) and sale (Box 1c): When you bought and sold the asset. 

• Cost or other basis (Box 1e): Your purchase price (or adjusted basis) of the asset. 

• Gain or loss (Box 1g/2): Indicates whether the gain was short-term or long-term. (Short-term vs. long-term status is typically shown, as in Box 2.) 

• Wash sale losses (Box 1g): Any loss disallowed by wash sale rules. 

In other words, the 1099-B shows the information you’ll need to compute capital gains or losses on Schedule D. The IRS instructs brokers to report on 1099-B items such as acquisition date, selling price, cost basis, and holding period so taxpayers can determine their gain or loss.

Broker and Barter Exchanges Explained

A broker is any firm that buys and sells securities for customers. If you traded through an online brokerage or stockbroker, they act as the broker issuing your 1099-B.

A barter exchange is a marketplace where businesses trade goods or services without cash. Both brokers and barter exchanges must file Form 1099-B for clients who trade or exchange property.

In practice, this means you’ll receive a 1099-B whether you sold stock through a brokerage or participated in a barter deal, ensuring the IRS knows the transaction took place.

Form 1099 – DIV: Reporting Dividend and Investment Income

Form 1099-DIV reports dividends and related distributions from investments. This form is sent by banks and brokerages to any investor who received dividend income or capital gains distributions.

On a 1099-DIV, the most important items include: 

• Ordinary dividends (Box 1a) and qualified dividends (Box 1b) – These show your total dividends and how much qualify for lower tax rates. 

• Capital gain distributions (Box 2a) – These are payouts of capital gains from mutual funds or REITs. 

• Other boxes – Additional information such as Section 199A dividends (Box 5), foreign tax paid (Box 7), and cash liquidations (Box 9). 

In short, 1099-DIV tells the IRS (and you) how much dividend income you earned and of what types. According to Fidelity, “A 1099-DIV is a tax form that reports certain kinds of investment income,” including dividends from stocks and capital gain distributions from mutual funds.

Qualified vs. Non-Qualified Dividends

A key distinction on 1099-DIV is whether dividends are qualified or Non-qualified (ordinary).

Qualified dividends meet special IRS rules and are taxed at the favorable long-term capital gains rates (0%, 15%, or 20%, depending on income).

Non-qualified dividends are taxed at your regular income tax rate (up to 37% in 2025). Fidelity explains that a 1099-DIV will label the portion of your dividends that are qualified vs. non-qualified. In practice, this means you’ll pay less tax on qualified dividends.

For example, if a stock you own pays a qualified dividend, it might be taxed at 15% instead of your normal income rate. On your tax return, you’ll report ordinary dividends (Box 1a) and separately report how much of that amount is qualified (Box 1b). This distinction can substantially affect your tax liability.

Capital Gains Distributions

Mutual funds, ETFs, and other pooled investments often distribute capital gains to shareholders when they sell assets. These appear in Box 2a (Capital Gain Distributions) of the 1099-DIV. Even if you didn’t sell any shares yourself, if the fund sold stock, you get a piece of the gain. These distributions are generally taxed as long-term capital gains.

You must include these distributions on your return, typically on Schedule D, since the 1099-DIV provides the amount. In effect, capital gains distributions are another form of investment income that the IRS collects. 

Other Box Breakdown

Form 1099-DIV includes several other items worth noting:

• Box 5 (Section 199A Dividends): Reports any qualified REIT dividends or mutual fund (RIC) dividends eligible for the 20% Section 199A deduction. 

• Box 7–8 (Foreign Tax Paid and Country): If foreign tax was withheld on your dividends, those amounts and countries appear here. 

• Box 9 (Cash Liquidation Distributions): If a corporation you held stock in was liquidated, any remaining cash distributed shows in Box 9. 

• Miscellaneous: Other boxes cover items like exempt-interest dividends or any backup withholding. 

These details help ensure you report all dividend-related income correctly. IRS instructions explicitly list Box 5 as “Section 199A Dividends” to capture that nuance. 

Final Reminder and Next Steps

Review all 1099-B and 1099-DIV forms carefully before filing. Make sure your brokerage’s report matches your own records of trades and dividend income.

A common mistake is overlooking a small capital gains distribution or misreporting a cost basis from an old purchase, errors that can trigger IRS notices or require amended returns.

• Check Basis and Dates: Ensure your cost basis and dates on the 1099-B are correct. Adjust any old basis if you know it differs. 

• Confirm Box Totals: Verify ordinary vs qualified dividend totals on 1099-DIV, and any capital gain distributions. 

• Reconcile 1099s to Your Records: Compare these forms to monthly statements and your year-end portfolio summary. 

Accurate reporting of dividends and investment sales is important for compliance. As Fidelity notes, brokers send out 1099-DIV to help you know what income to report. By cross-checking everything now, you can avoid surprises and potential audits later. 

If you have questions or need help interpreting these forms, remember 1099 Accountant’s Tax Advisory team specializes in investment and trading taxes for self-employed professionals. We can help ensure your 1099 income is entered correctly and optimize any deductions related to your investments. 

Schedule a consultation to review your 1099 forms and tax situation.