Do I Need to Report My Charles Schwab Investment Account on Taxes When I Haven't Sold Any Investments?

Yes, you absolutely need to report the dividend income shown on your 1099-DIV, even if you haven't sold any investments. Dividends are considered taxable income in the year they're received, regardless of whether you withdrew that money or had it automatically reinvested. The good news is that you don't need to report anything related to the unrealized gains/losses (the increase or decrease in value of your mutual fund) since you haven't sold anything. The capital gains tax you mentioned only applies when you actually sell investments for a profit. When you go to your tax preparer, bring the entire 1099 composite form. They'll know exactly where to input the dividend information on your return. Usually, this goes on Schedule B if the amount is over $1,500, or directly on your 1040 if it's less. The INV and B sections showing minimal activity probably won't impact your return much, but your preparer should still have the complete form to ensure everything is reported correctly.

After dealing with a similar situation last year, I found this amazing tool called taxr.ai (https://taxr.ai) that literally saved me hours of confusion with my investment documents. I was in almost the exact same position - had just opened an account at Fidelity, received a bunch of tax forms, and had no idea what to do with them. The tool actually analyzes all your tax documents, explains what each line item means, and tells you exactly what you need to report. It was super helpful for understanding those 1099 composite forms that have all those different sections that make no sense to normal humans lol. You just upload your forms and it walks you through everything in plain English.

Just wanted to follow up here - I took the advice and tried taxr.ai with my complicated investment situation and it was actually super helpful! I've been struggling with making sense of multiple 1099s from different brokerages plus some crypto stuff, and it organized everything perfectly. The explanation for each form was really clear - it even pointed out that I was getting double-taxed on some dividends that were showing up on two different forms. That alone saved me about $340 in taxes I would have overpaid. Plus it generated a full report I could just hand to my accountant instead of dumping a folder of random documents on her desk like I usually do. Definitely made my tax prep much less stressful this year!

For what it's worth, I had a similar issue but needed clarification directly from the IRS. Spent literally 3 days trying to get through on their phone lines with no luck. Finally found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 20 minutes. They have a demo video showing how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed exactly what others are saying here - you absolutely need to report dividend income even if you didn't sell any investments. She also explained some nuances about qualified vs non-qualified dividends that affect your tax rate. Really helpful to get the official word straight from the source instead of stressing about whether I was interpreting things correctly.

OK I have to admit I was wrong. After my skeptical comment I decided to try that Claimyr service because I've been trying to resolve an issue with my 2023 return for months with no luck getting through to anyone. The service actually worked exactly as described - got a call back in about 25 minutes and was connected to an IRS agent who helped clear up my issue. What's funny is I actually asked the IRS agent about this exact question - reporting investment accounts when you haven't sold anything. She confirmed you absolutely must report any dividends or interest income on your taxes (that's what's on your 1099-DIV), but you don't report anything about the value of the investments themselves until you sell them. Glad I could get a definitive answer straight from the source!

Just a tip from someone who's been investing for years - make sure you check if your dividends are "qualified" or "ordinary" on that 1099-DIV form. Qualified dividends get taxed at the lower capital gains rate (0%, 15%, or 20% depending on your income) while ordinary dividends get taxed as regular income (your normal tax bracket). Most mutual funds distribute a mix of both types, so it can make a difference in your tax bill. Your tax preparer should know this, but doesn't hurt to double-check!

One thing nobody mentioned - if you have dividend-generating investments in a retirement account like a Roth IRA or traditional IRA, you DON'T need to report those dividends on your taxes! The taxation is different for retirement accounts. But since you mentioned Charles Schwab sent you a 1099, that means it's a taxable account, so yeah, you gotta report those dividends. But just wanted to point that out in case anyone reading has both types of accounts.

Hey Keisha! You've gotten some great advice here already. Just want to add one more thing that might be helpful - since you mentioned you're using a tax preparer this weekend, make sure to ask them about setting up quarterly estimated tax payments for next year if your dividend income is substantial. Even though you only had the account for a few months in 2024, if you're planning to keep investing throughout 2025, those dividends will add up over a full year. If the dividends end up being significant, you might need to make quarterly payments to avoid an underpayment penalty when you file next year's taxes. Your tax preparer can calculate this for you based on your total tax situation and help you set up the payments if needed. It's much easier to plan ahead than to get hit with a surprise tax bill next April!

Great question, Keisha! Everyone here has given you solid advice about reporting dividends. I just wanted to add one quick tip that might help you going forward - consider keeping a simple spreadsheet or notes about your investment activities throughout the year. Since this is your first year dealing with investment tax forms, it can be helpful to track things like when you made contributions, any dividend reinvestments, and major account activities. This makes it much easier when tax season rolls around next year, especially if your investment activity increases. Also, don't stress too much about the complexity - you're doing great by asking questions and using a tax preparer! The fact that you're being proactive about understanding your tax obligations shows you're on the right track with your financial planning.

Hey everyone! This thread has been incredibly helpful - I'm actually in almost the exact same situation as Keisha. I opened my first investment account last year and was totally confused about what I needed to report. One thing I wanted to add from my experience: when you go to your tax preparer, make sure to bring ALL the pages of that 1099 composite form, even if some sections show zeros or minimal activity. I made the mistake of only bringing the pages that had numbers on them, thinking the blank ones weren't important. Turns out my tax preparer needed to see everything to make sure nothing was missed. Also, if you're using online tax software instead of a preparer, most of the major ones (TurboTax, H&R Block, etc.) have specific sections for investment income that will walk you through entering the 1099 information step by step. They'll ask you questions in plain English and translate that to the right tax forms automatically. Thanks to everyone who shared their knowledge here - this community is awesome for helping newcomers navigate all this tax complexity!