• Print
  • Default text size A
  • Larger text size A
  • Largest text size A

Understanding Your Tax Reporting Statement for Mutual Fund Accounts

Each year, we send tax statements to customers subject to IRS Form 1099 reporting. This guide provides detailed information to help you understand your Fidelity tax statement.

How to report mutual fund income

The IRS generally requires you to report information for each mutual fund separately in the applicable section of your federal income tax return. Do not report an aggregate total of all your dividends, and/or sales of shares from all your mutual funds under the name "Fidelity Investments." You are required to report both taxable and tax-exempt income, including any exempt interest dividends reported on your tax statement.

Form 1099 for transferred accounts

If your account was transferred to Fidelity from another company in 2014, your tax statement only includes activity from the time you started conducting business with us. Your former brokerage or clearing firm should provide Form 1099 and any other applicable tax reporting forms for activity that occurred while you were with them.

Form 1099 for S corporation account owners

If you made any 2014 sales or exchanges of covered Fidelity mutual fund shares, we report only those transactions on Form 1099-B of the Tax Statement (sent to you and to the IRS). In addition we will send you an Informational Tax Statement (not reported to the IRS), reporting all 2014 income in your account.

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.

*Fidelity will report gross proceeds as well as certain cost basis and holding period information to you and to the IRS on your annual Form 1099-B as required or allowed by law, but such information may not reflect adjustments required for your tax reporting purposes. Taxpayers should verify such information when calculating reportable gain or loss. Fidelity specifically disclaims any liability arising out of a customer's use of, or any tax position taken in reliance upon, such information. Unless otherwise specified, Fidelity determines cost basis at the time of sale based on the average cost method for open-end mutual funds and based on the first in, first out (FIFO) method for all other securities. Consult your tax advisor for further information.

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.

  • How do the new IRS cost basis reporting rules apply to my Fidelity Funds account?

    The IRS began to require cost basis reporting for registered investment companies, including open-end mutual funds, and stocks acquired in dividend reinvestment plans purchased on or after January 1, 2012. As a result of these new regulations, we are required to report most cost basis information for mutual fund sales, redemptions, exchanges, etc. on Form 1099-B.

  • How do I determine which of the dividends reported as qualified dividends on Form 1099-DIV are eligible to be taxed at one of the lower federal long-term capital gain tax rates?

    Beginning with tax year 2013, the American Taxpayer Relief Act of 2012 permanently extends the 0% and 15% tax rates for qualified dividends for single filers with taxable incomes below $406,751 and joint filers with taxable incomes below $457,601. The top rate will permanently increase to 20% for filers with taxable incomes above these thresholds. Qualified dividends are generally dividends from domestic corporations and certain qualified foreign corporations for which the requisite holding period(s), described below, are satisfied.

    In order for the qualified dividends reported to you in column 1b of Form 1099-DIV to be taxed at one of the lower federal long-term capital gain tax rates (the rates are 0%, 15%, 18.8%, and 23.8% for 2014), you had to have held the dividend-paying mutual fund unhedged for at least 61 days out of the 121-day period that begins 60 days before the ex-dividend date. If you did not hold the fund unhedged for the requisite period, the dividends should be taxable at ordinary income tax rates as high as 39.6%. See Qualified Dividends for more information.

  • Which mutual fund dividends do not qualify for the lower tax rates?

    Mutual fund dividends attributable to interest, dividends on stock issued by certain foreign companies, and dividends on stock not held by the mutual fund for the requisite holding period will not qualify for long-term capital gain tax rates at which qualified dividends are potentially taxed. All or a portion of mutual fund dividends attributable to short-term capital gains also may not qualify for long–term capital gain tax rates at which qualified dividends are potentially taxed. The dividends just described will likely comprise a portion of the total ordinary dividends reported in column 1a of Form 1099-DIV. Mutual fund dividends that are reported as qualified dividends in column 1b on Form 1099-DIV, but for which a shareholder does not satisfy the requisite holding period for the dividend-paying mutual fund, also will not qualify for the lower long-term capital gains tax rates. See Qualified Dividends for more information.

  • Why is there a difference between my Fidelity statements and what is reported to the IRS?

    Fidelity must adhere to IRS requirements when reporting on Forms 1099-DIV and 1099-B, which may result in differences between what is on your monthly and quarterly statements and what is reported to the IRS. For example, the IRS requires that transactions on Form 1099-B be reported based on the trade date even though your statements reflect sales based on the settlement date. Additionally, mutual fund distributions declared as payable to shareholders of record in October, November, or December and paid prior to February 1 of the following year are taxable to shareholders based on the record date, not when paid.

  • Why am I taxed on mutual fund distributions paid in January 2015?

    Unlike dividends from individual securities, which are typically taxed in the year the dividends are paid, mutual fund distributions are usually taxed based on the record date of the distribution. For example, mutual fund distributions declared as payable to shareholders of record in December 2014, and paid in January 2015, are taxed as 2014 distributions and reported on Form 1099-DIV.

  • Do I use trade date or settlement date when determining my holding period for sales?

    The IRS requires you to use the trade date to determine your holding period. The "Date Sold or Disposed" on Form 1099-B is the trade date for each sale. Your monthly statement reports settlement date, which is the date by which payment is due.

  • Why are nondividend distributions reported to the IRS on Form 1099-DIV?

    Fidelity is required to report these distributions to you and to the IRS. Nondividend distributions generally reduce your basis in your shares (but not below zero). This becomes important when you sell your shares and need to calculate your gain or loss. However, a nondividend distribution is taxable as (and must be reported as) a capital gain to the extent that it exceeds your shares' adjusted basis.

  • What are the primary tax implications of owning a mutual fund that invests in foreign securities?

    Dividends and interest earned on foreign securities may be subject to a withholding tax by the country from which they were paid. If you own a mutual fund that earned dividends or interest on foreign securities, the mutual fund may have paid foreign taxes related to 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. Form 1099-DIV reports the gross amount of the dividend (column 1a), including the foreign tax amount, and the amount of foreign tax (if any) that you may be able to claim as a deduction or credit (column 6). You must report the gross amount of the dividend on your tax return even if you are also able to deduct or receive credit for foreign taxes. 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 Mutual Fund Tax Information page on Fidelity.com. You may also want to consult your tax advisor or refer to IRS Publication 514, Foreign Tax Credit for Individuals (PDF).

Additional information

  • Visit Fidelity's Tax Center or call the number on your tax form.
  • Visit the IRS website or call 800-829-1040.
The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Fidelity does not provide legal or tax advice. Fidelity cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws which may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Fidelity makes no warranties with regard to such information or results obtained by its use. Fidelity disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Before using the Fidelity Tax Center, review important legal information and terms of use applicable to products, services, and/or information provided by, or accessed through, the Tax Center by the following companies:

Intuit® 
The use of the TurboTax branded tax preparation software and web-based products is governed by Intuit's applicable license agreements. Intuit, the Intuit logo, TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries and are used with permission. Intuit is not affiliated with Fidelity Brokerage Services (FBS) or their affiliates. Intuit is solely responsible for the information, content and software products provided by Intuit. Fidelity cannot guarantee that the information and content supplied is accurate, complete, or timely, or that the software products provided produce accurate and/or complete results. Fidelity does not make any warranties with regard to the information, content or software products or the results obtained by their use. Fidelity disclaims any liability arising out of your use (or the results obtained from, interpretations made as a result of, or any tax position taken in reliance on information provided pursuant to, your use) of these Intuit software products or the information or content furnished by Intuit.

See Intuit's terms of service.

GainsKeeper®
The use of GainsKeeper branded products is governed by Wolters Kluwer Financial Services (Wolters Kluwer) applicable license agreements. GainsKeeper and the GainsKeeper logo are registered trademarks and/or service marks of Wolters Kluwer. Wolters Kluwer is not affiliated with Fidelity Brokerage Services (FBS) or their affiliates. Wolters Kluwer is solely responsible for the information, content and software products provided by it. Fidelity does not explicitly or implicitly endorse or approve such information, content or products. Fidelity cannot guarantee that such information and content supplied is accurate, complete, or timely, or that the software products provided produce accurate and/or complete results. Fidelity does not make any warranties with regard to the information, content or software products or the results obtained by their use. Fidelity disclaims any liability arising out of your use (or the results obtained from, interpretations made as a result of, or any tax position taken in reliance on information provided pursuant to, your use) of these Wolters Kluwer software products or the information or content furnished by Wolters Kluwer.

TradeLog®
The use of TradeLog branded products is governed by Armen Computing Ltd. (Armen) applicable license agreements. TradeLog and the TradeLog logo are registered trademarks and/or service marks of Amren. Armen is not affiliated with Fidelity Brokerage Services (FBS) or their affiliates. Armen is solely responsible for the information, content and software products provided by it. Fidelity does not explicitly or implicitly endorse or approve such information, content or products. Fidelity cannot guarantee that such information and content supplied is accurate, complete, or timely, or that the software products provided produce accurate and/or complete results. Fidelity does not make any warranties with regard to the information, content or software products or the results obtained by their use. Fidelity disclaims any liability arising out of your use (or the results obtained from, interpretations made as a result of, or any tax position taken in reliance on information provided pursuant to, your use) of these Armen software products or the information or content furnished by Armen.

566515.8.0