I e-filed my Federal return a few weeks ago, with a refund due to me. Today I received a 1099 that I did not report in my taxes. However, the only tax amount is a .32 cent loss. For this amount, which I think would round down to nothing, must I amend my Federal return (once the 1040X is available for 2021 tax year in March)? The 1099 itself of course says that information on it is being reported to the IRS. Thanks
No, you do not have to amend your return. You are correct that the amount would round to 0 and would have no effect on your returns.
Thank you Alicia. Quick follow up....the 1099-B states both the cost basis and proceed amounts will be reported to the IRS. However, someone told me that they would only receive the proceed amount. I realize that in years past, at least, furnishers did only report proceeds to the IRS, so the IRS did not know the cost basis. However, I had thought that was updated to now include furnishers providing the cost basis too.
Do you know for sure on this nuance? Thanks
To follow-up on the comments from @AliciaP1, your 1099-B will reflect whether the cost basis was reported to the IRS. Transactions where cost basis is reported to the IRS are designated as "covered" on your 1099-B. If you have transactions that are listed on your 1099-B as "uncovered," for those transactions your brokerage firm is not required to report cost basis to the IRS and probably has not. For uncovered transactions, the taxpayer needs to report basis to the IRS.
When you see on your 1099-B that short term transactions should be reported on Form 8949 with Box A checked, those are transactions that are covered where basis has been reported to the IRS. Long-term transactions that need to be reported on Form 8949 with Box D checked are covered and thus, cost basis has been reported to the IRS.