It depends. You could receive a penalty for not prepaying tax if you have a balance due. The IRS expects the tax to be paid as you earn income throughout the year. To avoid the "not prepaying tax penalty," you must have met one of the following requirements:
- Pay 90% of the tax you owe for the current year as estimated tax payments.
- Pay 100% (or 110% for high income) of last year's tax bill as estimated tax payments.
The 1099-B will be issued from the Broker and mailed to you and the IRS. The 1099-B will list items such as:
- description of items sold
- date the item was bought and sold
- how much was the original cost was
- how much was received when sold
If you own an asset, such as stock, and sell it and then reinvest in another stock, there can be a gain or loss on the original stock. This gain or loss will be reported on your return on the Schedule D form.
If you feel the $10,000 listed on your 1099-B needs to be revised, you can contact the broker and have them correct the 1099-B. However, you will want to match any transaction listed to your record to make sure an error did occur.
Gains can affect your social security, depending on how much earnings you have for the year.
If you earn between $25,000-$34,000 as a single filer, you will pay income taxes on up to 50% of your Social Security benefits. Or if you earn more than $34,000 as a single filer, you will pay taxes on up to 85% of your Social Security benefits. The maximum your social security can be taxed is 85%. TurboTax will calculate how much of your taxable income is based on the income you entered.
Here are additional links on social security, 1099-Bs, and penalties:
IRS Penalties
Social Security Tax
What is a 1099-B?
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