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Industry Spotlight: Options Tax Man is Looking Out for You

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January 1, 2015

New rules for 2014 changed how brokerage firms report options trading activity and other transactions to their customers on year-end filings. It’s not as boring as it sounds (really). Because if you’re trading options, the changes affect you.

The new rules dealing with options are part of multi-year roll out of updated broker reporting requirements that have already been applied to other investments like stocks and mutual funds. Phase III for 2014 also includes cost basis numbers on some less complex debt instruments. The final phase will expand in 2016 to include more complex debt.

So in early-2015 you might see new information on your 1099. Specifically, the 2014 statement will include a section with all options trades, along with the cost basis for each transaction. The new information is designed to better align broker reports with tax reporting requirements. Of course, options transactions have always been reportable. For the IRS, the changes help ensure that investors are reporting their options trades correctly. For the investor, it means better and more detailed information for preparing year-end taxes. That’s the good news.

The Caveat

The bad news is that the new rules only require reporting the information from the year 2014 forward. So, you’re going to need some help finding the information for positions opened in 2013 and prior. Fortunately, as a TD Ameritrade client, you have access to GainsKeeper® , which already produces similar reports, which will not only help you gather up your prior years’ information, but keep tabs on results throughout the coming year(s) as well.

Access GainsKeeper

See GainsKeeper in action. Log in to your account at tdameritrade.com, and select Gain/Loss under My Account.