I Just Started Investing in Stocks - What Do I Need to Do for Taxes?

If you started investing using an app like Robinhood or another brokerage, you may be wondering:

“What tax forms am I going to get and what do I do with them?”

The good news is that brokerages handle most of the reporting for you.Your job is mainly to understand what the forms mean and make sure they’re included on your tax return.

🟢 OWNING STOCKS DOES NOT AUTOMATICALLY MEAN TAXES

Simply buying and holding stocks usually does not create a tax bill.

You typically won’t owe taxes if:

🔹 You only bought stocks and did not sell.

🔹 You did not receive dividends or interest.

Taxes usually come into play when you sell stocks or earn income from them.

🟢 THE TAX FORMS BROKERAGES SEND YOU

If you had any taxable activity, your brokerage will usually send you one or more 1099 forms early in the year (often in February).

These forms are also sent to the IRS.

Here are the most common ones new investors see:

🟢 FORM 1099-DIV - DIVIDENDS

You may receive a 1099-DIV if your stocks paid dividends.

Dividends are:

🔹 Cash payments made by some companies to shareholders.

🔹 Often paid quarterly.

🔹 Taxable in many cases — even if reinvested automatically.

If you see a 1099-DIV, it means you earned investment income that usually needs to be reported.

🟢 FORM 1099-INT - INTEREST

A 1099-INT reports interest earned, such as:

🔹 Interest on uninvested cash in your brokerage account.

🔹 Interest from certain funds or money market holdings.

Even small amounts of interest are usually reported to the IRS.

🟢 FORM 1099-B - STOCK SALES

A 1099-B is issued when you sell stocks or other investments.

This form shows:

🔹 What you sold.

🔹 When you bought and sold it.

🔹 How much you received from the sale.

It helps determine whether you had a gain (profit) or a loss.

Even if you lost money, these sales still need to be reported.

🟢 WHAT YOU DO WITH THESE FORMS

You don’t usually file these forms by themselves.

Instead:

🔹 You provide them to your tax software or tax professional.

🔹 The information is included on your tax return.

🔹 The IRS matches what you report to what the brokerage reported.

Ignoring these forms can lead to IRS notices later.

🟢 WHAT IF I MADE VERY LITTLE MONEY?

Even small amounts matter.

You may still need to file a return if:

🔹 You sold stocks, even at a small gain or loss.

🔹 You received dividends or interest.

🔹 You already need to file for other reasons.

Low income doesn’t automatically mean “no filing.”

🟢 COMMON MISTAKES NEW INVESTORS MAKE

🔹 Ignoring brokerage tax forms.

🔹 Assuming reinvested dividends aren’t taxable.

🔹 Forgetting that losses can be reported too.

🔹 Waiting for an IRS letter instead of filing correctly.

Most problems come from confusion, not wrongdoing.

🟢 NEED HELP WITH INVESTMENT TAXES?

Investing is exciting, but the tax side can feel overwhelming at first.

At Pacific Change, we help new investors understand what their brokerage forms mean and make sure everything is reported correctly without overcomplicating things.

If you’d like help reviewing your first year of investing, we’re happy to help.