Have you ever heard of the 1099 form? If you’re an American citizen and an investor you need to make sure you are familiar with this form. Your 1099 form will be the tax form where you report gains and/or losses on your investments. The government always wants a cut, and if you don’t fill out the right forms you could find yourself in the cross hairs of the IRS.
There are many kinds of 1099 forms. For example, there are the 1099 div and the 1099-b forms. Both of which might be required for you to calculate your taxes. You can head to the IRS’s website to figure out which forms you need, or you can talk to a local tax expert. If you’re having trouble figuring out how your taxes work you should consider hiring help, especially your first time around.
If you are trading through a brokerage firm or investing in a fund, you should receive a 1099 form from them by or around February 15th of each year. This form will tell you how much money you are liable to pay taxes on. Some issuers have until March 15th to report “final” numbers, and sometimes they will send you a form marked “figures not final.”
Taxes Are Complicated
Filing taxes can be difficult, especially if you don’t happen to be a financial expert. Many accountants and lawyers make their careers just out of understanding United States tax codes. The American tax code is considered to be among the most complicated in the world.
In fact, many experts consider the U.S. tax code to be the most complicated in the world. The American tax code is filled with countless different forms, uncountable loopholes, and endless requirements. Perhaps we sound dramatic, but if you’ve ever had to fill out your taxes yourself, you’ll likely agree.
You shouldn’t be afraid to reach out and ask for help with doing your taxes. As we’ve made clear, taxes can be very complicated and IRS tax forms can be all but impossible to read. The IRS 1040 and other forms are very difficult for many people to fill out, but if you take some time to ask questions it gets a lot easier.
Luckily, when it comes to filling out IRS tax forms there are a lot of resources out there. You can hire a professional to help you fill out your 1099 and form 1040 for you. Or you can use a software program, such as TurboTax, to provide electronic assistance with filling out your taxes. There are many different options so make sure you take some time to find the solution that suits your needs.
Investments Are (of course) Taxed, But It’s Not So Bad
Your investments will be taxed in the United States, though investments are taxed at a lower rate than other types of income. Taxes on net capital gain are generally no higher than 15%, though it should be noted that we are only talking about long-term capital gains, meaning investments you’ve held on to for at least a year or more.
Taxes on traditional income, however, can reach as high as 39.60%! That’s why many wealthy families rely on investments rather than salaries. Of course, the tax code is very complex so you need to examine your own situation to understand your position and how much you will have to pay in taxes.
So if you are considering a way to generate income, investing definitely deserves a close look. If done right, your investments could make you a lot of money and best of all you’ll get to keep a larger chunk of that money. That probably explains why investing is becoming so popular.