The Stash 1099 Tax Guide

Why use Stash?

Stash is ideal for beginners learning how to invest but can be a helpful platform for anyone. Stash provides a list of ETFs based on your risk tolerance and investment priorities. While you are ultimately responsible for selecting what you want to invest in Stash will provide additional educational notes to help establish a diversified portfolio which is a generally recommended strategy.

Are you taxed on your investments with Stash?

The short answer is yes – your investments are taxed the same way any money you make on any other type of investment. Taxes for Stash are similar to Acorns 1099 for investments. There are several different types of taxes you could owe depending on the types of investments you choose. Common taxes related to investing include capital gains, dividends, and income interest.

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Capital gains tax

The capital gains tax is a tax on gains made from buying and selling investments. For example, if you invest $10 in a stock, sell it for $12, then you will pay a capital gains tax on the $2 profit.

Fortunately, the amount taxed is comprehensive over the course of a year so if you lose money on an investment the loss will reduce the total amount being taxed.

Taking the above example where you made $2 - if you make a second investment during the year of $12 and sell it for $10 then at the end of the year your $2 will offset your $2 gain from earlier in the year so there would not be a remaining amount to be taxed.

Dividend tax and interest tax

The dividends and interest taxes are more straightforward. If you earn in

Dividends and interest are taxed as income since you are essentially earning a profit off the money you invested. For dividends, there are several different potential tax rates you could pay depending on if the dividends are considered “qualified” or “non-qualified”. The 1099-DIV form will indicate what type of dividends they are. The interest tax rate is straightforward because it is taxed at your ordinary taxable income rate.

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Why would you receive a tax document for Stash?

You will receive a 1099 form from Stash this year if any of the below situations took place last year.

• You received more than $10 in dividend payments from EFTs or mutual funds during the year.
• You received any dividend payment from an individual stock during the year.
• You received more than $10 in interest payments. Interest payments typically come from the Stash investment account. This account is like a savings account that earns interest. For most people, it is where their money sits prior to investing in stocks, mutual funds, or EFTs.
• You took a distribution from a StashIRA account of $10 or more.
• You sold any stock, mutual fund, or EFT investment

It should be noted that if you opened your Stash Invest account the previous calendar year, you will not receive tax documents until the next year.

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What tax form will you receive from Stash?

The simple answer is you will receive a 1099 to be used for your tax return. The real question is what type of 1099 IRS form will you receive and what does it tell you?

Form 1099-R

You would receive a 1099-R if you took a distribution from a retirement account. The only type of retirement account Stash offers is the Stash IRA. You will receive a 1099-R if you took a distribution from a Stash retirement account if your withdrawal was greater than $10.

Form 1099-INT

The 1099-INT form is used to report interest earnings during the year. This form is sent to you by Stash if you earned more than $10 in interest during the year.

Form 1099-DIV

The 1099-DIV is like the 1099-INT. The only difference is it is used to report dividend income. This form is sent to you by Stash if you earned more than $10 in dividends from EFTS or mutual funds OR if you earned any divided directly from a stock.

Form 1099-B

The 1099-B is a tax form sent to you from Stash so that you can report any gains or losses from selling stocks, mutual funds, or EFTs during the year. You will only receive this form if you are using a traditional investment account. If you are using the Stash IRA retirement account, you will not receive this form because you do not pay taxes on the gains until you make a withdrawal from your retirement account. Stash will only send the 1099-B if you sold more than $20 in investment during the year or if you are subject to any backup withholding. Backup withholding typically happens when the information submitted to the IRS does not match the information you have on file with Stash. Fortunately, backup withholding issues can often be corrected by contacting Stash to ensure all your information is up to date and accurate.

Consolidated Form 1099

It is very possible you meet the requirements for multiple 1099 forms. For example, you may have received a stock dividend and earned more than $10 in interest during the year. Instead of sending you multiple 1099 forms to keep track of, Stash will send a single consolidated 1099. The consolidated 1099 lumps everything together on a single form.

1099-MISC

You will receive a 1099-MISC form if you get referral bonuses or Found Money offers totaling more than $600 that didn’t require a purchase

When will you receive your tax document from Stash?

There are several key deadlines to keep in mind. These deadlines are Federal deadlines so it is possible you will receive your tax document prior to the dates listed below.

February 15

All applicable tax forms are provided by Stash in February

March 15 - Corrected Consolidated Form 1099

This form will be issued to Stash investors who held All that Glitters (GLTR) or Real Estate Tycoon (VNQ) in 2020 and meet certain income distribution requirements. GLTR and VNQ are asset-focused investments instead of stock-focused which means they are structured differently. This also extends the time needs by fund managers to calculate your investing activity.

GLTR covers fund expenses by selling small portions of their assets throughout the year. This can result in either a gain or loss for you as the investor which will impact your taxes.

VNQ pays dividends based on the underlying real estate rental profits. Dividends from rental profits are non-qualified dividends which means they will be taxed as ordinary income.  

This form consolidates all the relevant 1099s related to your account just like a traditional Consolidated 1099. The difference is it also includes updated information particular to the GLTR and VNQ investments.  Your Corrected Consolidated 1099 will be available by March 15, which will replace the 1099s made available to you in February.

Form 5498

The Form 5498 will be provided to anyone who has a Stash Retire IRA. This form will provide information about all activity that took place within your Stash Retire IRA during the 2020 tax year. Since this is a retirement and you are not taxed on individual transactions that take place in the account the Form 5498 is for informational purposes only and is not needed to complete your year end taxes.

Will you still receive a tax form if you close your account?

Stash will still contact you via your email if you receive a tax document. It does not matter if your account is active or closed. In fact, if you close your account it is highly likely that you will receive a tax form of some time.

Special tax situation: Stash custodial accounts

A custodial account is an investment account held in the name of a minor. Normally it is held by a parent, legal guardian, or another relative. The benefit of this type of account is it provides a lot of investment flexibility unlike some other types of account’s setup for minors but depending on how much income is generated the minor could still be treated as a taxpayer.

Unfortunately, there are some complicated tax rules surrounding custodial accounts. The basic rule is any dividends or interest over a set rate is taxed. For 2020, the first $1,100 is exempt from taxes. The second $1,100 is typically taxed at the child’s tax bracket rate. If the minor earns more than $2,200 in unearned income (dividends and interest) a Form 8615 must be filed. Please speak to a tax advisor for additional details.

Special tax situation: Stash IRAs

Stash IRAs follow the same rules as any other IRA. Stash offers both traditional (pre-tax) and Roth (after-tax) accounts. Keep in mind there are potential early withdrawal penalties if you do follow the IRS tax rules for your IRA unless you are withdrawing your funds to do a rollover into another qualified retirement account.

The traditional account allows you to put in money pre-tax. This means you will not pay income tax on any amount put into the traditional Stash IRA during the year. You will only be taxed once you take a distribution (withdrawal).

The Roth account allows you to make withdrawals tax-free. Unlike the traditional account you will pay income taxes immediately instead of at the time of your distribution.

Both types of account have annual contribution limits which means there is a cap on how much you can put into the account each year. It is often beneficial to seek out tax advice when selecting between a Traditional and Roth IRA.

5 things to remember about your Stash account

1. You will be taxed on capital gains, dividends earned, and interest earned on your Stash account
2. There are several different 1099 forms you may receive by February 15th but a consolidated 1099 will be provided instead of multiple different types of 1099 forms.
3. You will receive a Corrected Consolidated 1099 by March 15th if you invest in asset-focused investments like All that Glitters (GLTR) or Real Estate Tycoon (VNQ).
4. The Corrected Consolidated 1099 should be used instead of the 1099 form you received in February.
5. Special accounts like the Stash custodial account, Stash Invest, and Stash IRAs have different tax rules than regular investing accounts.