Fidelity's 2014 tax reporting statement consists of two parts:
- Tax reporting statement – The information we report to the IRS on Forms 1099-DIV and 1099-B. Fidelity incorporates these separate, stand-alone forms on one consolidated statement. The titles, lines, column headings, and box numbers used on our consolidated statement correspond to those used on the individual, stand-alone IRS forms.
- Supplemental information – This is additional information (not reported to the IRS) that you may find helpful in preparing your income tax returns, including some transaction activity details.
The two parts of your tax statement are illustrated and explained in more detail below. Sample statements shown are for illustrative purposes only. Certain categories of transactions may not pertain to your account.
Form 1099-DIV lists all taxable, tax-exempt, and nondividend distributions from mutual funds held in your account. The dividends and capital gain distributions, shown on Form 1099-DIV, must be reported on your 2014 federal income tax return regardless of whether they were paid in cash or reinvested. If an Unrecaptured Section 1250 gain, Section 1202 gain, or Collectibles (28%) gain was distributed, line 2b, 2c, and/or 2d will appear, respectively, on Form 1099-DIV.
The 2014 percentage of income from U.S. Government Securities letter for applicable Fidelity Funds will be available in early January on the Fidelity Fund-Specific Tax Information page in Fidelity's Tax Center. You may find this letter useful, as you prepare your state income tax, if you received dividends from Fidelity Funds that received income from U.S. government securities.
Exempt interest dividends generally are not subject to federal income tax, but you are still required to report these dividends on your federal income tax return. Fidelity reports exempt interest dividends you received, fund by fund, in column 10, labeled Exempt Interest Dividends. You are required to add these amounts to any other 2014 federal tax-exempt interest (including any federal tax-exempt original issue discount interest) you have earned, and report the total on line 8b of Form 1040 or Form 1040-A. For state tax-exempt information for Fidelity federal tax-exempt funds, in early January you will be able to see the Percentage of State Tax-Exempt Income letters on the Fidelity Fund-Specific Tax Information page.
If you are subject to the alternative minimum tax (AMT), you are required to report on your federal income tax return the amount of your tax-exempt interest that is subject to the AMT. The portion of the exempt interest dividends you received from mutual funds held in your account that is subject to the AMT is reported, fund by fund, in column 11, labeled "Specified Private Activity Bond Interest Dividends." For more information, see the IRS Instructions for Form 6251, Alternative Minimum Tax–Individuals. For residents of California, Connecticut, Minnesota, and New York, Fidelity may be required to report all or a portion of your total exempt income.
Any federal income tax withheld on dividends and distributions you received in your account is reported, fund by fund, in column 4, labeled Federal Income Tax Withheld. If your fund paid foreign tax, we report the amount that you may be able to claim as a deduction or credit in column 6. We add the foreign tax paid to the dividend amount you received and report the total in column 1a and, if applicable, column 1b. For this reason, the total dividends reported on the form may be higher than the amount that you actually received. For additional 2014 foreign tax credit pass-through information, in early February you will be able to see the Important Information for Individuals About Foreign Tax Paid letter on the Fidelity Fund-Specific Tax Information page of the Tax Center.
Form 1099-B lists all 2014 proceeds from the redemption, exchange, or other disposition of shares held in your Fidelity Funds account. We report all transactions on a trade-date basis, as required by the IRS, and we report the proceeds as gross proceeds. To complete your federal income tax return, you will be required to provide the cost basis for the shares sold in order to determine the associated realized gain or loss. Similar to the rules governing the tax treatment of long-term capital gains distributions, the lower tax rates (20%, 15%, or, for those taxpayers in the two lowest tax brackets, 0%) apply to any long-term capital gains realized on the sale or exchange of mutual fund shares. In general customers must report the information on Form 1099-B by completing Form 8949 (PDF) and/or Form 1040, Schedule D (PDF). Help Completing Your 2013 Form 1040, Schedule D may assist you in tax return preparation.
How Fidelity reports covered and noncovered shares on Form 1099-B*
Fidelity reports the following information to the IRS for both covered and noncovered shares:
- Description (1a)
- Date Sold or Disposed (1c)
- Proceeds (1d)
- Federal Income Tax Withheld (4)
Note: The numbers following each category correspond to the equivalent box numbers on the stand-alone IRS Form 1099-B.
For reported covered security transactions, we provide the following additional information to both you and the IRS:
- Date Acquired (1b)
- The holding period of the security that you sold (short-term, long-term, or unknown) (2)
- Cost or Other Basis (1e)
- Wash Sale or Market Discount (1f and 1g)
- Basis is reported to the IRS (3 or 5)
When available, we provide this same information for noncovered securities on Form 1099-B to you, but not to the IRS. In order to present all of this information for covered and noncovered shares, as required by the IRS, we divide Form 1099-B into five distinct sections:
- Short-term covered
- Short-term noncovered
- Long-term covered
- Long-term noncovered
- Transactions whose basis is not reported to the IRS and whose term is unknown
Fidelity's cost basis calculations methods
Fidelity follows IRS rules when calculating average cost basis for mutual fund positions. Average cost is Fidelity's default calculation method for mutual funds. As a result, Fidelity reports cost basis on the 1099-B to you and the IRS (for covered shares only) using the average cost method, unless you specified another applicable method prior to trade settlement.
If a transaction includes both noncovered and covered shares of the same security, we calculate cost basis separately for the noncovered shares using the average cost calculation method. To help you complete Schedule D using information provided in Form 1099-B, Help Completing Your 2013 Form 1040, Schedule D. This guide provides additional information about bifurcation and it may assist you in tax return preparation.
The State/Local Tax-Exempt Income from Fidelity Funds section reports the amount of exempt interest dividends you received from Fidelity state-specific tax-exempt funds that may be exempt from state and/or local income taxes, and the amount that may be taxable. For state tax-exempt information for Fidelity federal tax-exempt funds, in early January you will be able to see the Percentage of State Tax-Exempt Income letter on the Fidelity Fund-Specific Tax Information page.