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Common FAQ of Tax

Q:  Why didn’t I receive a tax form?

A: There are two reasons why a tax form hasn’t been received.

1) The amount of reportable income does not meet the reportable de minimus threshold:

1099 B- All amounts are reportable

1099 INT- At least $10 in reportable interest for line 1, 3 or 8

1099 DIV- At least $10 in dividends (including capital gains dividends and exempt-interest dividends) or other distribution on stock

2)  The account is currently on holdback, as there are additional adjustments needed, and will be available no later than March 10, 2023

Q:  Why is the cost basis on my 1099B different that what is shown in the system?

A: The 1099B shows the actual cost to purchase the security using the FIFO methodology (First In First Out), along with any wash sale and return of capital adjustments.  The moomoo system shows the average or diluted cost, which are not IRS approved methodologies. The average cost of a stock (excluding commissions and fees) uses the purchases made in the account to calculate the average. The gain or loss corresponding to the sale of a stock does not dilute the average cost but is converted to realized gain or loss. The diluted cost is the break-even price during the holding period, which means you can sell at this price without profit and loss (do not include commission and other fees). This method considers the profit and loss of every transaction (cash dividends and rights issues are not included) during the holding period. Both buy and sell executions change the diluted cost.

Q:  Why did I receive 2 separate 1099 DIV forms?

A: There was a change in brokerage accounts from Interactive Brokers to Futu Clearing Inc. One 1099 DIV is for dividends earned while the account was held at Interactive Brokers and another for the remainder of the year for dividends earned while the account was held at Futu Clearing Inc.

Q:  Why did I receive both a 1099 and a 1042S?

A: During the year there was a change in tax status from W8 to W9 or vice versa. The 1042S is for the income subject to withholding for the portion of the year where the W8 was applicable. The 1099 is for the income earned for the portion of the year after the W9 was applicable.

Q:  Who do contact with questions about the 1099 or 1042S?

A: Please contact the Customer Service team who can assist