Tax Statement FAQs
- What are the new IRS cost basis reporting regulations?
- Why is there a difference between what is reported in my Fidelity statements and what is reported in my Informational Tax Reporting Statement?
- Is a corporation eligible to claim a dividends-received deduction with respect to qualified dividends reported in the Dividends and Distributions section of the Informational Tax Reporting Statement?
- Are the amounts reported in the Tax-Exempt Income from Fidelity Funds section exempt from corporate income taxation?
- What are the primary tax implications of investing in foreign securities or owning mutual funds that invest in foreign securities?
- I used a foreign currency to purchase a security. Now I see that I have a Detail Information section reporting Currency Gain/Loss. What is this section reporting?
- How is accrued interest on bond purchases reported in this Informational Tax Reporting Statement?
- How are my short sales reported?
- Why are interest payments or distributions on my limited partnership missing?
What are the new IRS cost basis reporting regulations?
Beginning with tax year 2011, the IRS expanded the cost basis reporting requirements for Form 1099-B, Proceeds from Broker and Barter Exchange Transactions. In accordance with the new IRS rules, Fidelity has begun reporting cost basis for certain covered securities on Forms 1099-B (Proceeds from Broker and Barter Exchange Transactions) for brokerage accounts, beginning with Tax Year 2011 (printed and mailed in January - February 15, 2012). The IRS Form 1099-B is part of the non-exempt Fidelity Tax Reporting Statement and is also part of the information that we are required to report to the IRS. Your Informational Tax Reporting Statement reflects similar changes, because it presents tax information in a format similar to a statement for a non-exempt account. Whereas in past years certain information appeared on either the Informational Tax Reporting Statement or on the (1099) Tax Statement, but not on both, this is no longer the case. As a result, we also include your information, reported on the 1099 Tax Statement, on the Informational Tax Statement. This is a change from past years. We only report 1099 Tax Statement information to the IRS, even if it also appears on Informational Tax Reporting Statement.
Covered securities
Generally, the new regulations define covered securities as:
- Stock in a corporation purchased on or after January 1, 2011.
- Registered Investment Companies, including open-end mutual funds, and stocks acquired in dividend reinvestment plans purchased on or after January 1, 2012
- All other securities, defined by the Treasury Department, purchased on or after January 1, 2014.
Why is there a difference between what is reported in my Fidelity statements and what is reported in my Informational Tax Reporting Statement?
We only provide Informational Tax Reporting Statements to customers who our records indicate are generally exempt from Form 1099 reporting. The information on the Informational Tax Reporting Statement that you receive is determined as though we were required to report to you under the IRS Form 1099 reporting requirements. These requirements differ in certain respects from the manner in which Fidelity reports to you through monthly, quarterly, and year-end statements. For example, while the IRS requires sales transactions to be reported based on the trade date (as reflected in your Informational Tax Reporting Statement), your Fidelity statements reflect sales based on the settlement date. In addition, following IRS requirements, we report the mutual fund distributions declared as payable to shareholders of record in October, November, or December 2012, and paid prior to February 1, 2013, in the 2012 Informational Tax Reporting Statement.
Is a corporation eligible to claim a dividends-received deduction with respect to qualified dividends reported in the Dividends and Distributions section of the Informational Tax Reporting Statement?
Not necessarily. The qualified dividend distributions reported include distributions of qualified dividends received from foreign corporations (for which the dividends received deduction cannot be claimed). If you received a dividend distribution from a Fidelity mutual fund reported in line 1a in the Dividends and Distributions section of the Informational Tax Reporting Statement that may qualify for the corporate deduction for dividends received, in mid-February you will be able to see the Percentage of Dividends Received which May Qualify for a Deduction letter on the Fidelity Fund-Specific Tax Information page in Fidelity's Tax Center. This letter identifies the percentage of each dividend distribution from a Fidelity mutual fund reported in line 1a that is attributable to dividends received by the fund from domestic corporations and which may qualify for the corporate deduction for dividends received.
Are the amounts reported in the Tax–Exempt Income from Fidelity Funds section exempt from corporate income taxation?
This income may be exempt from corporate income taxation at the federal level, yet subject to taxation at the state and/or local level. It also may be subject to the federal alternative minimum tax. Consult your tax advisor, who is most familiar with your tax situation and with the tax laws of your state and/or locality.
What are the primary tax implications of investing in foreign securities or owning mutual funds that invest in foreign securities?
Dividends and interest earned on foreign securities may be subject to withholding tax by the country from which they were paid. If you held securities that paid dividends or interest that was subject to foreign tax, the Dividends and Distributions section and the Interest Income section report the gross amount of the dividends or interest (as applicable) and the amount of tax withheld at the source. You may be able to claim a credit or deduction on your federal tax return for the amount of tax paid to foreign countries.
If you own a mutual fund that invests in foreign securities, the mutual fund may have paid taxes to foreign countries in respect of those securities. As a shareholder of that mutual fund, you may be able to claim a credit or a deduction on your federal tax return for a portion of those foreign taxes. The Dividends and Distributions section of your Informational Tax Reporting Statement reports the gross amount of the dividends you received (including the foreign tax amount) and the amount of foreign tax (if any) that you may be able to claim as a credit or a deduction. For more details on claiming a foreign tax credit for Fidelity funds that distributed income from foreign investments, in early February you will be able to see the Important Information for Corporate Investors about Foreign Tax Paid letter on the Fidelity Fund–Specific Tax Information page in Fidelity'sTax Center. You may also want to consult your tax advisor or refer to IRS Instructions for Form 1118, Foreign Tax Credit — Corporations.
I used a foreign currency to purchase a security. Now I see that I have a detail information section reporting Currency Gain/Loss. What is this section reporting?
This section reports in United States dollars (USD) the estimated gain/loss on the foreign currency position that you disposed of in the security purchase. When you acquired that foreign currency position, a USD cost basis was established in that position (see the description of the Currency Realized Gain/Loss section in this web guide and the footnotes on that section of your statement) and, based on changes in exchange rates between that time and the time of the security purchase, you experienced a gain or loss in the USD value of that foreign currency position which you realized when you used the foreign currency position to purchase the security.
How is accrued interest on bond purchases reported in this Informational Tax Reporting Statement?
The Interest Income section reports the interest payments on a cash basis and includes any interest you paid to the seller when you purchased the bond. We report accrued interest separately in the Accrued Interest Paid on Purchases section. For tax reporting, you may need to adjust for interest included when you purchased the bond.
How are my short sales reported?
Starting in 2011, the IRS requires us to report short sales in a new way. Any short sale entered into in 2011 or later will not be reported in your Informational Tax Reporting Statement until you have closed the short sale. In most cases, this section will show the date that you closed the short sale, the acquisition date of the security used to close the short sale, and the adjusted basis of the security used to close the short sale. If you closed a short sale in 2012 that was opened in prior to 2011, this transaction will not appear on your 2012 Proceeds from Broker and Barter Exchange Transactions section, but it will appear in one of the detail Realized Gain/Loss sections. Tax reporting rules may be different for corporations and other non-individual taxpayers. For more information on short sales, see IRS Publication 550, Investment Income and Expenses, or consult your tax advisor.
Why are interest payments or distributions on my limited partnership missing?
If you held a limited partnership in 2012, the partnership will provide a Schedule K-1.
Additional information
- Visit Fidelity’s Tax Center or call the number on your tax form.
- Visit the IRS web site or call 1-800-829-1040.
