Question

Khalid and Miriam have made a lot of money from investments this past year, but they aren’t sure how much they have already paid in taxes on these investments. They are wondering if the government has kept records for them in any way. What information would you share to help them be more informed?


They will receive a 1040 form to tell them what they have earned (and paid) on investments.


They will receive a W-2 form to tell them what they have earned (and paid) on investments.


They will receive a 1099 form to tell them what they have earned (and paid) on investments.


They will receive a 1040EZ form to tell them what they have earned (and paid) on investments.

Answer 1

Correct answer: They will receive a 1099 form to tell them what they have earned (and any tax withheld) on investments.

Quick explanation and practical tips:
- Brokers, banks and other payers issue 1099s for investment income: 1099-INT (interest), 1099-DIV (dividends), 1099-B (stock/bond sales), 1099-R (retirement distributions), etc. Those forms show amounts paid to you and any federal tax withheld. The payers also send copies of those 1099s to the IRS, so the government already has records of those payments.
- Your filed Form 1040 (not the payor’s 1099) is the return that reports that investment income and shows your total tax due and the amount of tax already paid (withholding, estimated payments). If you want to see what you actually reported/paid, look at your 1040.
- W-2s report wages from employers, not investment income.
- Form 1040EZ was a short-form individual return used in prior years but is not the way investment income is reported; it’s been discontinued/replaced by the redesigned 1040.

If you can’t find your 1099s, check your broker’s online statements or contact the broker. You can also request an IRS Wage & Income Transcript to see what information returns (1099s, W‑2s) the IRS has on file for you.