{"id":29741,"date":"2017-04-05T13:34:43","date_gmt":"2017-04-05T18:34:43","guid":{"rendered":"https:\/\/resource-center.hrblock.com\/?p=29741"},"modified":"2022-04-05T16:10:41","modified_gmt":"2022-04-05T21:10:41","slug":"investing-apps-and-the-irs","status":"publish","type":"post","link":"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/income\/investments\/investing-apps-and-the-irs\/","title":{"rendered":"Investment App Taxes – Robinhood, Acorns & More"},"content":{"rendered":"

Active investors have complicated tax situations. That\u2019s because they must properly report all their investment activity and gains and losses on their tax returns. And with a new crop of\u00a0investing apps<\/a>\u00a0like Robinhood, Acorns, Wealthfront, and Stash, some online investors are left confused on how to report earnings to the IRS.<\/p>\n

The IRS knows all about these transactions, too. The IRS receives\u00a0 billions of pieces of information about stock and investments sales \u2013 namely,\u00a0Form 1099-B<\/a>,\u00a0Proceeds From Broker and Barter Exchange Transactions<\/em>. The IRS matches these information statements against tax returns to make sure all the income is on the returns.<\/p>\n

(Did you know\u2026\u00a0Form 1099-B makes up more than half of the tax statements the IRS receives each year.)<\/em><\/strong><\/p>\n

As long as you file by the last day of taxes in 2021<\/a>, the IRS starts matching your return in the summer. For extended filers (Oct. 15), the IRS starts matching the returns in the winter.<\/p>\n

When people\u00a0leave income off their return, they can expect the IRS to notice<\/h2>\n

Each year, nearly 28 million returns out of more than 150 million returns filed don\u2019t match information statements. If this happens to you, you may receive a letter from the IRS \u2013 usually IRS notice CP2000 or, especially for investors, IRS notice CP2501. This is called an\u00a0automated underreporter inquiry.<\/strong><\/p>\n

The notice proposes changes to your return and asks you to explain the missing income on your return.\u00a0\u00a0 In short, underreporter inquiries look and feel a lot like an IRS audit.<\/p>\n

Avoid Mismatches<\/h2>\n

Because the IRS receives so many Forms 1099-B, investors often experience underreporter inquiries from the IRS. The only way to avoid these inquiries is to report every\u00a0transaction.<\/p>\n

For many investors, that\u2019s easier said than done. Keeping track of investment sales can be difficult. And the IRS isn\u2019t much help in providing Forms 1099-B before the tax deadline<\/a>, because it doesn\u2019t compile all of the forms until late May of each year.<\/p>\n

If you\u2019re a frequent online investor or you\u2019re unsure whether you have all your information statements to file an accurate return, here\u2019s one tip that can save you from an underreporter inquiry:\u00a0File an extension<\/a>\u00a0and request your wage and income transcripts from the IRS in June. You can use this information to make sure you report all transactions on your return. Doing this can also save you money by making sure you report losses, too.<\/p>\n

How to get your wage and income transcripts<\/h2>\n

To get your wage and income transcripts, you can\u00a0use the online IRS Get Transcript tool. If you have trouble accessing the application, order the transcripts by mail using the same Get Transcript request or by using\u00a0Form 4506-T,<\/a>\u00a0Request for Transcript of Tax Return<\/em>. Learn more about researching your IRS account.<\/a><\/p>\n

Or, your tax preparer can easily get your transcripts through a special tax pro hotline if you fill out a\u00a0Form 8821<\/a>,\u00a0Tax Information Authorization<\/em>.<\/p>\n

If you actively use investing apps, save yourself the time and hassle of an underreporter inquiry, and request all the information you need to file an accurate return!<\/p>\n

If this information is making you dizzy, don\u2019t worry! A tax pro at H&R Block can help.\u00a0Learn about H&R Block Tax Audit and Notice Services<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Active investors have complicated tax situations. That\u2019s because they must properly report all their investment activity and gains and losses on their tax returns. And with a new crop of\u00a0investing apps\u00a0like Robinhood, Acorns, Wealthfront, and Stash, some online investors are left confused on how to report earnings to the IRS. The IRS knows all about […]<\/p>\n","protected":false},"author":554,"featured_media":29742,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[24,47],"tags":[],"class_list":["post-29741","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income","category-investments"],"acf":[],"yoast_head":"Investment App Taxes - Robinhood, Acorns & More | H&R Block<\/title>\n<meta name=\"description\" content=\"Learn more about the tax implications of investment apps like Robinhood, Acorns, Wealthfront & Stash with H&R Block. 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