Whether I need to file taxes or not?

[ALZ14]

Greetings,

Our income is quite a bit below the threshold needed for filing taxes.

We have long term capital gains losses, however, that doesn't mean much as we have very little capital gains to offset them against.

What we do have is a TD Amertrade account seems to issue a report to the IRS showing them "Short term Proceeds"; form 8949. Unfortunately, the document they send does not show the "basis reported to the IRS". Therefore, as far as I understand I have to file a tax return that includes the cost basis. Last year the difference between the cost basis and proceeds was $46. Yuck.

Suggestions??? Any way to not have to file?

thank you,

Andy

[PerpetuaSG]

Normally, brokerage firms report cost basis and the type of capital gain on Form 1099-B.  However, in some instances, they may not be required—or is simply unable—to provide a cost-basis for a sale. This could be the case if the securities you sold were purchased many years ago, or if you transferred your holdings from one securities firm to another prior to the new reporting requirement.  This may be the reason why your brokerage firm reported no basis reported on the Form 1099-B.  If you do not include a cost basis, you may be taxed on the entire proceeds of the sale which may bump you from the no-fling threshold to one who is required to file a return.  Thus, in either case, you would want to file a return.  

[KristinaK]

If your gross proceeds without basis don't take you over the filing threshold, you don't need to file. However, if they do take you over, you have two options:

1) Filing and reporting the correct basis, even if in the end you are not required to file. 

2) Not filing. The IRS may send you a notice asking for your return. You can then explain that you did not have a filing requirement due to not meeting the filing threshold, and show them proof of your basis in securities sold. Hopefully, you have confirmation of the purchases. 

Personally, I'd rather not deal with the IRS. Another advantage of filing is that your carried-over loss amount will carry to the next year correctly.