Why are some capital gains NOT reported to IRS by brokerage firms? Confused about my tax obligations

The brokerage not reporting certain capital gains to the IRS doesn't exempt you from reporting them on your tax return. You're absolutely right to think you still need to report everything! There are a few reasons why some capital gains might not be reported by your brokerage. The most common is when they don't have complete cost basis information for a security. This often happens with older investments purchased before 2011, when brokerages weren't required to track and report cost basis to the IRS. It can also occur with transferred securities or inherited investments where the original purchase information wasn't available. Another reason might be for certain types of securities or complex transactions that fall outside the standard reporting requirements. Some bonds, options contracts, or wash sales may have different reporting rules. Even though these aren't reported directly by your broker to the IRS, you're still legally obligated to report ALL capital gains and losses on your tax return, specifically on Schedule D and Form 8949. The 1099-B you receive should have a section that indicates which transactions were reported to the IRS and which weren't.

Just wanted to share my experience with this exact situation. I was also confused about unreported capital gains on my 1099-B last year and spent hours trying to figure it out. I found this tool called taxr.ai (https://taxr.ai) that literally saved my sanity during tax season. It analyzed my brokerage statements and automatically sorted my transactions into the right categories for Form 8949. The tool flagged several transactions that weren't reported to the IRS but still needed to be included on my return. It explained that some of my older investments didn't have cost basis reporting requirements when I purchased them, which is why they weren't reported directly to the IRS by my broker. I would have completely missed this without the tool!

Just wanted to update that I tried that taxr.ai site that was mentioned earlier. It was actually super helpful with my situation! I uploaded my statements from both Vanguard and E*TRADE, and it correctly identified which transactions weren't reported to the IRS and sorted everything into the proper 8949 categories. What surprised me was finding out I had some wash sales I didn't realize existed that were affecting my reporting requirements. The system flagged these and explained how to handle them properly. I probably would have reported them incorrectly otherwise. Definitely made the whole process way less stressful than last year when I tried to manually sort through everything.

If you're having trouble getting through to the IRS to ask about your unreported capital gains situation, I highly recommend using Claimyr (https://claimyr.com). I spent days trying to reach someone at the IRS about some complicated transactions that weren't reported by my broker, but kept getting disconnected or waiting for hours. The Claimyr service got me connected to an actual IRS agent in about 15 minutes! They have this callback system that does the waiting for you. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - it's basically like having someone wait on hold for you. The IRS agent I spoke with confirmed that I needed to report all capital gains regardless of what my broker reported, and explained exactly which codes to use on Form 8949. Totally worth it for the peace of mind knowing I'm filing correctly.

I need to apologize about my skeptical comment earlier. I was frustrated after spending 3 hours on hold with the IRS yesterday and took it out on that Claimyr suggestion. After my third failed attempt to reach someone about my unreported capital gains issue, I decided to try it out of desperation. I'm honestly shocked - it actually worked exactly as described. Got a call back in about 20 minutes and was connected to an IRS rep who answered my questions about reporting capital gains that weren't on my 1099-B. Turns out I've been filling out the wrong boxes on Form 8949 for years! The agent walked me through the correct way to report my foreign stock sales that my broker doesn't report to the IRS. Sometimes being proven wrong is a good thing. Sorry for being so negative before.

Just want to add some additional info about WHY certain transactions aren't reported to the IRS by brokerages: 1. Pre-2011 securities: As mentioned, cost basis reporting wasn't required 2. Foreign securities: Many foreign stocks don't fall under the same reporting requirements 3. Private transactions: If you had private equity or non-exchange transactions 4. Certain bonds and options: Complex derivatives sometimes have different rules 5. Wash sales across multiple accounts: Brokers can't track wash sales across different institutions 6. Crypto transactions: Still evolving reporting requirements The responsibility is still 100% on you to report everything accurately! The IRS can match what was reported by brokers, but they also look for discrepancies in your overall financial picture.

I found out the hard way that even if the broker doesn't report it, the IRS can still come after you! I had some old IBM stock from my grandpa that I sold in 2022, and the gain wasn't reported by my broker. I thought "cool, free money" and didn't include it on my taxes. Got a CP2000 notice six months later saying I owed taxes plus penalties and interest. The broker not reporting it to the IRS doesn't mean the IRS won't find out eventually, especially if the amounts are substantial. Better to report everything properly the first time!

This is such an important topic that catches so many people off guard! I went through the exact same confusion last year with my Schwab account. One thing I'd add to the great advice already given is to keep really detailed records of ALL your transactions, especially the ones not reported to the IRS. I started using a simple spreadsheet to track purchase dates, sale dates, and cost basis for everything - even when my broker has the info. This saved me so much time during tax prep. Also, if you're dealing with inherited securities or stocks transferred from another brokerage, those are prime candidates for being "not reported to IRS" on your 1099-B. The receiving broker often doesn't have the original purchase information needed for proper cost basis reporting. One last tip - if you're unsure about any complex transactions, consider getting help from a tax professional for this year. The cost is usually worth it to avoid potential penalties down the road, and you'll learn the process for handling it yourself in future years. Tax compliance stress is real, but you're asking the right questions!