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Tax forms you may receive

Many investment tax forms sound pretty similar. Make sure you know which ones you need and what to do with them.

POINTS TO KNOW

  • 1099 forms report income (including investment income) to you and the IRS.
  • Other forms are less common, but you may receive them for certain transactions or types of investments.

1099 forms

In general, 1099 forms report income other than wages. There are several types of 1099 forms.

As an investor, you might receive these forms:

  • 1099-B, which reports capital gains and losses.
  • 1099-DIV, which reports dividend income and capital gains distributions.
  • 1099-INT, which reports interest income.
  • 1099-R, which reports distributions from retirement accounts.

Other types of 1099 forms are less common, but you might receive them if you invest in certain types of securities or accounts, or if you perform certain transactions. These include:

  • 1099-MISC, which reports substitute payments in lieu of dividends.
  • 1099-OID, which reports any original issue discount (OID) from debt obligations, including Treasury Inflation-Protected Securities (TIPS).
  • 1099-Q, which reports distributions, including transfers to another financial institution, from education savings accounts (ESAs) and 529 accounts.

Other tax forms

There are several other forms you might receive from Vanguard. Here are the most common.

  • Form 5498, which includes information about transactions in traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs.
  • Form 5498-ESA, which includes information about contributions to education savings accounts (ESAs).
  • Form 1042-S, which reports information about investment income and distributions for accounts owned by nonresident aliens.

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REFERENCE CONTENT

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Capital gain

An increase in the value of an investment over the initial purchase price. A capital gain is "unrealized" until the investment is sold, when it becomes a realized gain. Realized gains are taxable and they may be considered short-term (if the investment was owned one year or less) or long-term (if the investment was owned for more than one year).

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Dividend

The distribution of the interest or income produced by a fund's holdings to its shareholders, or a payment of cash or stock from a company's earnings to each stockholder.

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Interest

Income you can receive by investing in bonds or cash investments. The investment's interest rate is specified when it's issued.

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529 savings plan

A type of investment account that offers federal and state tax benefits to people saving for higher education. These plans are sponsored by particular states but are usually open to anyone. The money in a 529 savings plan can be used for tuition and other qualified expenses at thousands of colleges, universities, graduate schools, and trade and technical schools in the United States and abroad.

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Bond

A bond represents a loan made to a corporation or government in exchange for regular interest payments. The bond issuer agrees to pay back the loan by a specific date. Bonds can be traded on the secondary market.

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Mutual fund

A type of investment that pools shareholder money and invests it in a variety of securities. Each investor owns shares of the fund and can buy or sell these shares at any time. Mutual funds are typically more diversified, low-cost, and convenient than investing in individual securities, and they're professionally managed.

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IRA (individual retirement account)

A type of account created by the IRS that offers tax benefits when you use it to save for retirement.

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Roth IRA

A type of IRA that allows you to make after-tax contributions (so you don't get an immediate tax deduction) and then withdraw money in retirement tax-free as long as you meet the requirements.