Interactive Brokers Group, Inc. · NASDAQ:IBKR
Interactive Brokers — Investor Presentation (2016)
37 slides from Interactive Brokers's investor presentation, 2016
Slide 1: Understanding your US tax forms: What does your Consolidated 1099 tell you?
Interactive Brokers presents Understanding your US tax forms: What does your Consolidated 1099 tell you? Nancy A. Nelson CPA, Tax Director nnelson@interactivebrokers.com Webinar begins @ 2:00 pm EST webinars@interactivebrokers.com www.ibkr.com/webinars Member SIPC www.sipc.org 1
Slide 2: Introduction
Introduction Understanding your tax information forms is essential to preparing Federal and State tax returns. Focus today on US Individual Tax Returns but most items are the same for trusts, partnerships and LLCs.
Slide 3: Circular 230 Notice
Circular 230 Notice The information in this presentation is provided for informational purposes only, and does not constitute tax advice and cannot be used by the recipient or any other taxpayer to avoid penalties under any federal, state, local or other tax statutes or regulations, or to resolve an
Slide 4: Tax Information Forms
Tax Information Forms W-2 – Wage report Forms 1099 – 17 different ones Form 5498 – IRA contributions Form 2439 – Undistributed LTCG Form 1098 – Mortgage Interest paid.
Slide 5: Consolidated 1099
Consolidated 1099 Consists of 5 different 1099 forms: 1099 INT – reporting interest, including UST and tax exempt interest 1099 DIV – reporting dividends, LTCG distributions, return of capital
Slide 6: Consolidated 1099
Consolidated 1099 1099MISC – for IB reports payments in lieu of interest, dividends and stock loan payments received 1099OID – Accrued interest on bonds when the bond price is discounted to reflect interest or interest rate changes
Slide 7: Consolidated 1099
Consolidated 1099 1099B - Net proceeds for sales of securities Covered Short – term Covered Long – term Uncovered Section 1256 Contracts and Options
Slide 8: Other 1099s
Other 1099s 1099R – Distributions from Qualified Plans IRAs 1099C – Cancellation of Debt
Slide 9: When are 1099s issued
When are 1099s issued 1099R – On or before January 31 2016 reporting delayed by the IRA custodian - Equity Trust Consolidated 1099 – Generally on or before February 15. When the date falls on a Saturday or Holiday, the next business day applies. For 2015 – February 16, 2016
Slide 10: Other IB Tax Reports
Other IB Tax Reports Dividend report – February 15th Form 8949 Worksheet – February 15th Form 5498 – May 31st
Slide 11: Other IB Tax Reports
Other IB Tax Reports Form 2439 – 90 days after the fiscal year end of the RIC or REIT that generated the report. Canadian Form NR-4 – March 31st
Slide 12: Form 1099R and 5498
Form 1099R and 5498 Form 1099R reports distributions: Remember all distributions must be reported on your tax return (line 15A, form 1040), even Roth distributions. This line does not add into your taxable income. If you have a traditional IRA – Use form 8606 to calculate taxable amount
Slide 13: Be aware of the 1099R box 7 codes
Be aware of the 1099R box 7 codes Most common: 1 – Early distribution, no known exception (in most cases <59.5) 2 – Early distribution, exception applies (under age 59.5) 3 - Disability 4 – Death 7 – Normal distribution
Slide 14: Form 5498
Form 5498 Reports IRA contributions made for prior year Issued May 31 Remember – you can make contributions to your IRA account until due date of your return (4/15) If you have a traditional IRA and make after tax contributions remember to file an form 8606 with your return to track cost basis Also
Slide 15: Consolidated 1099
Consolidated 1099 Consists of: 1099INT 1099DIV 1099OID 1099Misc 1099B Reported together (consolidated) on one information sheet.
Slide 16: 1099C Forgiveness of Debt
1099C Forgiveness of Debt- When a debt is forgiven, the amount forgiven in certain circumstances becomes taxable. For IB, this may be the result of a legal settlement. 16
Slide 17: Consolidated 1099
Consolidated 1099 IMPORTANT TAX INFORMATION: This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanctions may be imposed on you if this income is taxable and the IRS determines that it has not
Slide 18: 1099INT
1099INT What are the important lines: Line 1: Interest Income Line 3: Interest on US savings bonds and treasury obligations Line 4: Federal Income tax withheld Line 8: Tax-exempt interest Line 9: Specified private activity bond interest
Slide 19: 1099INT
1099INT Things to be aware of: Accrued interest paid: not reported to the IRS, but is included in the supplemental information on the consolidated 1099 Tip: Enter total of interest received on tax return and any accrued interest as a separate 1099 with a negative amount Remember: Interest income can
Slide 20: 1099OID
1099OID What is OID? Interest on bonds sold at a discount and accreted annually. Zero coupon bond is classic example.
Slide 21: 1099OID
1099OID What are the important lines: Line 1: OID for 2013 Line 2: Other periodic interest Line 6: OID on US Treasury Interest
Slide 22: 1099DIV
1099DIV What are the important lines: Line 1a: Total ordinary dividends Line 1b: Qualified dividends Line 2a: Total capital gain distributions Line 2b: Unrecaptured Sec. 1250 gain Line 3: Non – dividend distributions
Slide 23: 1099DIV
1099DIV What are the important lines (2): Line 5: Investment expenses Line 6: Foreign tax paid Line 8: Liquidation distributions – cash Line 9: Liquidation distributions – non-cash
Slide 24: 1099DIV
1099DIV What are the important lines (3): Line 10: Exempt Interest Dividends Line 11: Specified Private activity bond interest dividends
Slide 25: 1099DIV
1099DIV The Dividend report is your guide to the details
Slide 26: 1099MISC
1099MISC What are the important lines? Line 2: Royalties Line 3: Other Income Line 7: Non-Employee Compensation Line 8: Substitute payments in lieu of dividends and interest
Slide 27: 1099B
1099B IMPORTANT TAX INFORMATION: This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanctions may be imposed on you if this income is taxable and the IRS determines that it has not been reporte
Slide 28: 1099B
1099B Made up of 4 forms: Covered – short-term Covered – Long-term Uncovered Section 1256 Reporting
Slide 29: 1099B – Form 8949 Worksheet
1099B – Form 8949 Worksheet Form 8949 Worksheet: Presented in filing format - All the details for covered securities and non-covered securities 1099B forms Remember that these are account specific Your tax return covers all of your accounts
Slide 30: 1099B – Form 8949 Worksheet
1099B – Form 8949 Worksheet Remember for non-covered securities, the cost basis may not be correct; please review these worksheets carefully. Form 8949 Worksheet does not contain 1256 securities or options. A separate 1256 gain/loss report provides details concerning these transactions. 30
Slide 31: Other Information that we provide
Other Information that we provide On consolidated 1099: Margin interest paid Payment in Lieu paid Advisory fees paid Accrued Interest paid
Slide 32: Other Information that we provide
Other Information that we provide On dividend report: Qualified dividends that meet the holding period Details of all dividends paid Details of all PIL paid and received Details of Foreign tax withheld
Slide 33: Net Investment Income Tax (NII)
Net Investment Income Tax (NII) Net Investment Income Tax – part of the Affordable Health Care Act 3.8% on NII Form 8920
Slide 34: A word about CP2000 Notices
A word about CP2000 Notices What is a CP2000 notice? Why you may have received a notice and How to respond: Key items to include in any correspondence: The notice Why you think they are wrong A copy of the return where the item appears Keep a mailing record (certified, return receipt)
Slide 35: A second word about the CP2000
A second word about the CP2000 Keys to success: Respond promptly Send to the address indicated; payments go to a different place than the inquiries. BE PATIENT – you will get a letter that says they are looking in to it, but it will be at least 6 weeks before they respond.
Slide 36: Wrap up
Wrap up Good resources: IRS Publication 550 – Investment Income and expenses This publication is updated annually IRS Publication 551 – Basis of assets Instructions to the forms: Instructions to form 1040 Schedule A and Schedule B Instruction to form 1040 Schedule D and Form 8949 Instructions to for
Slide 37: Disclosures
Disclosures Options involve risk and are not suitable for all investors. For information on the uses and risks of options, you can obtain a copy of the Options Clearing Corporation risk disclosure document titled Characteristics and Risks of Standardized Options by calling (312) 542-6901. Futures ar
Interactive Brokers Group — Investor Presentation (2016) on 6ix