- 1). Assemble your tax documents. At the end of every tax year, you will receive a series of tax documents from your brokerage accounts. In general, you will receive 1099s, which will list your cumulative distributions. Form 1099-DIV will list all of your dividend payments, 1099-INT will show your interest payments, and 1099-B will outline the proceeds of all of your sales. If you took a distribution from a retirement account, you will also receive a 1099-R. In addition to your 1099s, you should obtain or prepare a list of the purchase dates and prices of any securities that you sold. Although a 1099-B will show your sales proceeds, it will not list your original cost basis. Many brokerage firms keep these records, so you should ask your firm or check your statements if you don't have the information yourself.
- 2). Calculate your investment results. For any security sales, you will have to calculate your gains and losses in order to determine the tax consequences. Match your purchase cost against your sales proceeds on Schedule D of your Federal Form 1040 to determine your capital gains and losses. If you have carryover losses from previous tax years, you can use them to offset gains in the current tax year.
- 3). File your taxes. Take the amount of your capital gain or loss and fill in line 13 of Form 1040. You will most likely have to attach a completed Schedule D as well. Enter your taxable interest payments on line 8a, and your nontaxable interest payments on line 8b. Ordinary dividends should be listed on line 9a, and qualified dividends--generally defined as dividends from common stock of domestic corporations--go on line 9b. If you have a 1099-R for a retirement plan distribution, you should list this amount on line 15a; the taxable portion of this amount, which should be listed on your 1099-R as well, goes on line 15b. For most investors, this is the extent of the necessary tax filings for brokerage account transactions.
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