234k views
4 votes
Dalia has several investment accounts. Her investments generate interest and dividend income, and she frequently buys and sells stocks and bonds. She may expect to receive which of the following information returns?

Option 1: W-4 form.
Option 2: Social Security statement.
Option 3: W-2 form.
Option 4: 1099 form.

1 Answer

3 votes

Final answer:

Dalia may expect to receive the 1099 form, which is used to report various types of income including dividends, interest, and capital gains from the sale of stocks and bonds. option (4)

Step-by-step explanation:

Dalia, who has several investment accounts involving interest and dividend income and the buying and selling of stocks and bonds, can expect to receive information returns on her investments. Specifically, Dalia may expect to receive the Option 4: 1099 form. The W-4 form is related to withholding allowances for employment, the Social Security statement is related to benefits and earnings from Social Security, and the W-2 form reports wages earned from employment. Thus, the 1099 form is the relevant information return for investment income, which includes dividends, interest, and capital gains from transactions like when an investor buys a stock at a lower price and sells it at a higher price, realizing a profit.

For example, if Dalia had bought shares of stock in a company like Wal-Mart at $45 and later sold them for $60, she would have a capital gain of $15 per share. Interest income from bonds and dividend income from stocks would also be reported on the 1099 form. Furthermore, this form helps taxpayers report their investment income correctly when they prepare their tax returns.

User Alpar
by
7.8k points