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Forms 1099-B vs 1099-R: A Payer’s Guide to Reporting Investment Sales and Retirement Payouts

Form 1099-B and Form 1099-R must be distinguished by any payer handling both investment sales and retirement distributions. The 1099-B or 1099-R difference rests on the money source. One tracks assets sold from a brokerage account, and the other tracks funds withdrawn from a tax-advantaged retirement plan. Getting this right is critical. This guide covers the key rules so payers can send the correct form and ensure penalty-free filing.

What Is Form 1099-B & What It Covers

When investments, like stocks, bonds, mutual funds, options, or assets traded through a barter exchange, are sold through a broker or exchange, the IRS requires a record of the transaction. The sale price, date, and other details are used to determine the taxpayer’s gain or loss. Form 1099-B is the form that provides that record.

(Note: Starting January 1, 2025, sales of digital assets are reported separately on Form 1099-DA. The digital asset broker that effected the sale must prepare and send the form.)

Form 1099-B is required when a broker or barter exchange effects a sale for a customer—there’s no minimum dollar threshold, but do not file for exempt recipients.

What the payer needs to report on the form includes:

  • Proceeds (gross cash proceeds) (Box 1d)
  • The asset’s cost or basis, if the broker has that information (Box 1e)
  • Any federal tax withheld from the sale (Box 4)

What Is Form 1099-R & What It Covers

Form 1099-R is the form used to report money removed from a retirement account. This includes payouts from pensions, IRAs, 401(k) plans, annuities, and similar retirement plans. The IRS uses it to understand how much was withdrawn and how much of that amount is taxable.

The payer, trustee, or plan administrator who makes the distribution must file Form 1099-R. They must file it when the payout is $10 or more.

What the payer reports on the form:

Box 1 – Gross distribution

This shows the full amount that was withdrawn from the retirement account, even if part of it isn’t taxable.

Box 2a – Taxable amount

This is the portion of the distribution the IRS treats as taxable income for the year. Sometimes it matches Box 1, and sometimes it’s lower depending on the type of account and contributions.

Box 7 – Distribution code(s)

This code explains why the money was withdrawn. For example, an early withdrawal, a normal retirement payout, or a rollover (Code G).

These codes help the IRS understand how the distribution should be taxed.

Why Accurate Filings Matter

Choosing the wrong form affects both the payer and the person receiving the statement. The IRS applies penalties for information returns due in 2026—

  • $60 per information return if you correctly file within 30 days after the due date
  • $130 per return if you file more than 30 days late, but by August 1
  • $340 per return if you file after August 1 or fail to file
  • If the failure is considered to be due to intentional disregard, the penalty is at least $680 per return, with no maximum

Getting the form right the first time prevents avoidable rework. When the payer files the wrong form, the recipient can’t report their income correctly, and the payer must correct and resend the statements.

Accurate forms also help maintain trust. Investors, retirement plan members, and other recipients rely on these documents to be clear and correct, and consistent accuracy reflects well on the payer.

Clean reporting further reduces IRS follow-up. When the information matches IRS records, the likelihood of audit letters or CP2000 mismatch notices drops significantly.

Forms 1099-B vs 1099-R: Key Differences

Topic Form 1099-B Form 1099-R
What it reports Details from selling investments handled through a broker or barter exchange. Withdrawals or payouts from retirement plans such as pensions, IRAs, 401(k)s, or annuities.
When it must be filed When a broker or barter exchange effects a sale for a customer. Note: For brokered sales, there is no minimum dollar amount. Required for designated distributions of $10 or more.
Main information shown Sale proceeds, cost basis, and any withholding tied to the transaction. Gross distribution, taxable amount, and distribution code(s) explaining the type of payout.
Who issues the form Brokers and barter exchanges that effect the sale. (Note: Digital asset sales for 2025 are reported on Form 1099-DA by digital asset brokers.) The payer, trustee, or plan administrator that makes the distribution.

Reporting Requirements for Form 1099-B

Here are the key payer 1099-B rules and what the IRS expects:

  • Report every completed sale for the year: Report each sale based on the trade date that occurs during the calendar year (Box 1c, ‘Date sold or disposed’). There’s no minimum dollar amount.
  • Provide the cost basis when needed: For “covered securities,” the payer must report the cost or basis. For noncovered securities, basis reporting isn’t mandatory, but the payer may include it if available.
  • Include more than traditional trades: Barter exchange transactions and short sales that close within the year also fall under Form 1099-B reporting.
  • Do not report retirement account sales on this form: If the transaction occurred within a retirement account (such as a 401(k) or IRA), the payer does not use Form 1099-B. Distributions from those accounts are reported on Form 1099-R instead.

Reporting Requirements for Form 1099-R

Payers must file Form 1099-R for each person to whom they made a designated distribution of $10 or more. Here are the payer 1099-R rules and what the IRS expects:

  • Report all retirement distributions: This includes designated distributions of $10 or more from IRAs, 401(k)s, pensions, and annuities.

Note: Do not report trustee-to-trustee transfers between IRAs where no payment is made to the participant.

  • Use the correct code in Box 7: The code informs the IRS why the money was withdrawn, such as an early distribution, a normal retirement payout, a rollover (Code G), disability, or another specific reason.
  • Include special situations: Form 1099-R must also report plan loan offsets and loans treated as deemed distributions under section 72(p), Roth conversions, disability payments, and reportable death benefits.
  • Don’t use this form for regular investment sales: If the transaction involves selling investments in a standard brokerage account, it should be reported on Form 1099-B, not Form 1099-R.

Common Reporting Errors and Solutions

Error Why It’s a Problem How to Fix / Prevent It
Using Form 1099-B for a 401(k) payout Retirement plan distributions (including IRAs) don’t belong on Form 1099-B; using the wrong form can cause mismatched reporting and penalties. Report the distribution on Form 1099-R with the correct Box 7 code; do not use Form 1099-B for retirement plan distributions (IRAs are exempt recipients for Form 1099-B).
Leaving Box 7 blank on Form 1099-R Box 7 drives how the IRS and the recipient treat the distribution for tax purposes; a blank code makes the form incomplete or incorrect. Enter the appropriate distribution code(s) in Box 7 before e-filing; review plan records and system mappings so codes are applied consistently.
Skipping original cost (basis) on Form 1099-B Without basis, the recipient may overpay tax or face IRS questions about the reported gain or loss. Report cost or other basis in Box 1e for covered securities. For noncovered securities, basis reporting is optional—if you are not reporting basis, leave Box 1e blank and do not estimate.
Filing recipient copies late Late or missing payee statements trigger tiered penalties per form. Use Tax1099 e-delivery and reminder features to furnish copies by the due date and monitor any undelivered emails or returned mail.
Forgetting to correct errors Uncorrected errors can lead to higher penalties later and CP2000 or mismatch notices for recipients. Use Tax1099’s “CORRECTED” feature promptly when amounts, TINs, distribution codes, or basis figures change, and retransmit both IRS and recipient copies.

Key Deadlines and E-Filing Tips

Understanding the 1099 deadlines for tax year 2025 (due in 2026) is essential for timely filing:

Deadline Action
February 2, 2026 Give Form 1099-R to recipients (January 31, 2026, falls on a Saturday).
February 17, 2026 Provide Form 1099-B to recipients. (Note that February 15, 2026, is a Sunday, and February 16 is a federal holiday.)
March 2, 2026 Mail paper forms to the IRS (rare)
March 31, 2026 E-file forms with the IRS (most payers)
Need more time? File Form 8809 by the due date for an automatic extension of 30 more days to file with the IRS (most Forms 1099; not automatic for Forms W-2 and 1099-NEC).

To extend time to furnish recipient statements, fax Form 15397 so it’s received by the recipient due date; if approved, the IRS generally grants up to 30 extra days (this extension is not automatic).

Why e-file with Tax1099?

Once you’ve separated investment sales from retirement distributions, the next step is filing them accurately and on time.

  • Upload a simple spreadsheet or connect via API when you handle many accounts or high transaction volume.
  • Run instant TIN checks through IRS TIN Matching to validate name/TIN combinations before filing and help lower the risk of CP2100/B-Notice mismatches.
  • Use one-click corrections and re-deliver recipient copies quickly if investment details, distribution codes, or addresses change after filing.

Real-World Reporting Scenarios

Scenario Correct Form / Code How to Report It
Broker sells shares for $15,000 (cost $9,000) Form 1099-B Report $15,000 gross proceeds in Box 1d and $9,000 cost or other basis in Box 1e for a covered security. The recipient reports the $6,000 gain; broker reporting and taxpayer return should align.
Plan sends $20,000 to retiree (age 65) Form 1099-R – Code 7 Show $20,000 in Box 1 (gross distribution) and the taxable portion in Box 2a. Enter Code 7 in Box 7 to indicate a normal distribution after reaching retirement age.
30-year-old takes $8,000 from IRA early Form 1099-R – Code 1 Report $8,000 in Box 1 and the taxable amount in Box 2a. Use Code 1 in Box 7 for an early distribution with no known exception; the recipient may owe a 10% additional tax unless an exception applies.
Crypto exchange swaps ETH → BTC, $4,500 value (2025) Form 1099-DA The digital asset broker reports $4,500 gross proceeds on Form 1099-DA for a transaction occurring on or after January 1, 2025. The recipient uses the form to compute gain or loss under the new digital asset broker rules.
Pension rolls $100,000 directly to IRA Form 1099-R – Code G Report $100,000 in Box 1 and $0 in Box 2a, with Code G in Box 7 for a direct rollover. This indicates a non-taxable rollover distribution.
Employee’s 401(k) loan offset at job exit, $12,000 Form 1099-R – Code M plus applicable numeric code Report $12,000 in Box 1 and the taxable amount in Box 2a. Enter Code M in Box 7 along with the appropriate numeric code (often 1 or 7) to show a qualified plan loan offset tied to severance or plan termination; the amount is taxable unless rolled over by the tax return due date.

Frequently Asked Questions

1. Must the payer send both forms if a retirement plan sells stock?

No. If the sale happens inside a retirement account, the payer does not issue Form 1099-B. Any money that leaves the plan is reported on Form 1099-R instead.

2. Is there a minimum dollar amount for 1099-B?

For brokered sales, there is no minimum dollar amount. For barter exchanges, Form 1099-B is not required if the fair market value of the property or services exchanged is less than $1. Also, do not file for exempt recipients (for example, corporations and IRAs).

3. Does a Roth conversion need Form 1099-R?

Yes. A Roth conversion is treated as a distribution from the original account, so it must be reported on Form 1099-R.

4. How does the payer report tax withheld on an investment sale?

Any federal tax withheld from the sale is shown on Form 1099-B. The payer includes it along with the sale proceeds and cost basis.

5. What if the payer files the wrong form?

The payer must correct it. Filing the wrong form can delay the recipient’s tax filing and may lead to IRS penalties. The payer needs to issue the correct form and fix the mistake as soon as possible.

6. Are corporations exempt from these forms?

For Form 1099-B, corporations are generally exempt recipients—do not file for broker transactions—except for barter exchange transactions and certain S corporation sales (for covered securities acquired after 2011). For Form 1099-R, file for each person to whom you made a designated distribution of $10 or more (typically individuals; estates or trusts may also be recipients).

The Bottom Line

When you clearly separate brokerage sales from retirement distributions, choose the right form, and apply the correct boxes and codes, 1099-B and 1099-R reporting becomes much more predictable. Getting this right the first time helps recipients report their income correctly, reduces the risk of CP2000 mismatch notices, and keeps IRS penalties at bay.

When you use Tax1099, you are able to upload or import transaction data, run TIN validity checks, and e-file both forms in one workflow instead of juggling spreadsheets.

Stay compliant and save time—use Tax1099 to e-file accurate 1099-B and 1099-R forms, send payee copies, and manage corrections before 2026 deadlines hit.