Forgot to include 1099-B but the gain/ loss is only $2.98. Should I file an amended return form 1040X?

[ToddL · Accepted solution]

Did the 1099-B report the cost basis used to calculate to $2.98 gain(loss)? If the answer is "Yes", I would not recommend taking the time and effort to file an Amended return. The unreported income is too low to result in any meaningful change in your tax return, and would not justify either your efforts or the IRS's efforts to process.

If, however, the gross sales proceeds amount was significant (> $100 ?) and the cost basis was not reported to the IRS, then you would be subject to tax on the total proceeds. 

The IRS does require you to report all of your income on your tax return. 

You can amend your returns to add this 1099-B and report the cost basis. If you decide to amend, see: How to Amend (Change or Correct) a Return You Already Filed

If you don't report the 1099-B the IRS may send you a Notice of Proposed Tax Increase later this year, and use the total proceeds to calculate the additional tax due. The same process is usually followed by states.

It isn't an audit, but a proposed bill for the tax on that 1099-B income, plus any interest or penalties. They do all the calculations and provide a payment voucher if you agree to the change. You can amend your return to report the income and cost basis OR you can elect  to pay the proposed increase in tax.

[ruelpaul]

The Cost or Other Basis was reported. Proceeds were 340.08 and Cost was 337.10. I agree that this gain/ loss will not result in any meaningful change in my tax return.

[merrimana]

What if the cost basis wasn't reported on the 1099-B to the IRS and the Gain or Loss was still only $3.50?  Do you recommend amending the return for this amount?

[MaryK4]

If the basis is not reported to the IRS, the IRS will apply zero basis.  If the TOTAL gain loss is $3.50 on ONE transaction you would probably be okay.  However, if the total is $3.50 and there are multiple transactions, you should amend to show the total.  If the IRS audits, they will only pick up the gain transactions on the 1099-B so you may get a bill for that amount.  While you will be able to respond and show the amount, it is better to do it now to avoid interest and penalty.

@merrimana

[maxenos327]

I have a total loss of -$40.00 from over 700 transactions. Should I still file form 1099-B?

[JoannaB2]

The sale of any investment is reported on 1099 B form. Any gain or loss from sale of stocks, bonds, or any investment must be filed as income on the 2020 income tax return regardless of the amount to avoid any additional tax assessments from the IRS and State.

[neerajsen]

I just received an amended 1099-B for 2019 from my broker which shows my cost basis of some redeemed bonds was more than $3000 over what the original 1099-B said.  Hence, the error is in my favor and will perhaps reduce my 2019 tax liability.  Do I have to file a 1040X for 2019 or is there an easier way to offset it on my 2020 tax return?  The problem is that the ripple effect will impact multiple QBI limit calculations, loss carryovers etc., (multiple forms 8995A's), all additional tax forms, and will again generate a 100+- page paper return.  Any expert advice?

[JotikaT2]

You will have to file an amended tax return for 2019.  You cannot update your 2020 income tax return for the corrected 1099-B form as each tax year is independent of the other and is reported on a cash basis overall.

Please see the links below for additional guidance.

Do I need to amend?

How to amend my return?

@neerajsen

[dwil190]

what if I forgot to file my 1099-b? I only earned around 4000 and gain about $500 in stocks

[DoninGA]

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@dwil190 wrote:

what if I forgot to file my 1099-b? I only earned around 4000 and gain about $500 in stocks

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You must file an amended tax return to add the 1099-B.

If the return is accepted you will have to amend your original tax return. An amended return, Form 1040-X, can only be printed and mailed to the IRS if the original tax return was not e-filed. The IRS will take up to 20 weeks or longer to process an amended tax return.

Before starting to amend the tax return, wait for the tax refund to be received or the taxes due to be paid and processed by the IRS.

See this TurboTax support FAQ for amending a tax return - https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-return/amend-change-correct-return-a...