How to Access and File Your Betterment Tax Documents

Managing taxes for your Betterment account is an essential part of staying compliant with IRS regulations. Each year, Betterment provides tax documents summarizing your investment activity, which you’ll need when filing your return. Understanding these forms ensures accuracy and may help reduce your tax burden.

Betterment makes retrieving tax documents simple, but knowing where to find them and what to check for can save time and prevent errors.

Common Broker Tax Forms

Betterment investors receive several tax documents reporting different types of investment income and transactions. These forms summarize taxable events such as capital gains, dividends, and interest earned throughout the year.

1099-B

The 1099-B form reports sales of securities, including stocks and exchange-traded funds (ETFs). It details transaction proceeds and cost basis, which determine capital gains or losses. Short-term gains, from assets held for one year or less, are taxed at ordinary income rates, while long-term gains are taxed at lower rates ranging from 0% to 20%, depending on taxable income.

Betterment employs tax-efficient strategies like tax-loss harvesting, which may generate additional reported transactions. Harvested losses can offset capital gains, and if losses exceed gains, up to $3,000 can be deducted from ordinary income. Any remaining losses carry forward to future years. Reviewing this form ensures cost basis accuracy, preventing overpayment of taxes.

1099-DIV

Dividends from investments in your Betterment portfolio are reported on the 1099-DIV form. It categorizes dividends as qualified or non-qualified, which are taxed differently. Qualified dividends, from U.S. corporations and certain foreign entities, are taxed at 0%, 15%, or 20%, depending on income level. Non-qualified dividends are taxed at ordinary income rates, which can be as high as 37%.

This form may also include capital gain distributions from ETFs, which are taxed as long-term capital gains. If foreign investments generated income, a foreign tax credit may be reported, potentially reducing tax liability. Reviewing the 1099-DIV ensures correct tax treatment when filing.

1099-INT

Interest income from Betterment accounts is reported on the 1099-INT form. This applies if you have cash holdings in a high-yield savings account or if Betterment’s cash management features generated interest. Interest income is fully taxable at your federal income tax rate.

If annual interest exceeds $1,500, the IRS requires it to be reported separately on Schedule B. Tax-exempt interest, such as from municipal bonds, may also be noted. While exempt from federal taxes, it may be taxable at the state or local level. Checking the 1099-INT ensures accurate reporting.

Retrieving Your Documents

Betterment provides tax documents electronically, typically by mid-February. Logging into your Betterment account and navigating to the “Documents” section under “Tax Forms” allows you to download them as PDFs.

For those using tax preparation services like TurboTax or H&R Block, Betterment offers direct integration, reducing manual data entry and minimizing errors. If working with a CPA or tax professional, downloading and providing the forms ensures they have the necessary information. Keeping copies for at least three years is advisable in case of an IRS audit.

Checking Data for Accuracy

Verifying your Betterment tax documents before filing prevents IRS inquiries, amended returns, or unexpected liabilities. Ensure your personal information, including name, Social Security number, and account details, is correct to avoid processing delays or mismatches.

Review transaction summaries, especially if you made Roth IRA conversions or taxable account withdrawals. IRS regulations require specific reporting for rollovers and conversions, and misreporting could result in penalties. If you made charitable donations through a donor-advised fund, confirm reported amounts align with your records, as these contributions may be deductible.

Check reinvested earnings as automated reinvestments can cause small discrepancies in cost basis reporting. While Betterment tracks this automatically, cross-referencing figures with your records helps prevent inconsistencies. If you received a corrected 1099, ensure you use the most updated version when filing.

Filing Requirements

Filing requirements depend on IRS income thresholds, which vary by filing status and age. For 2023, single filers under 65 must file if gross income exceeds $13,850, while those over 65 have a higher threshold of $15,700. Married couples filing jointly must file if income exceeds $27,700, increasing to $30,700 if both spouses are over 65. These figures adjust annually for inflation, so checking the latest IRS guidance is advisable.

Investment income from Betterment may also trigger additional tax obligations. The Net Investment Income Tax (NIIT) imposes a 3.8% surtax on individuals with modified adjusted gross income (MAGI) exceeding $200,000 ($250,000 for married couples filing jointly). This applies to interest, dividends, and capital gains. Estimated tax payments may be necessary if investment income results in a tax liability of $1,000 or more beyond withholdings, with penalties for insufficient or late payments.

When to Consult a Professional

While tax software can handle most Betterment tax documents, some situations warrant professional guidance. Complex scenarios, such as multiple brokerage accounts, substantial capital gains, or alternative investments like cryptocurrency, may require expert assistance. A tax professional can help navigate these complexities and identify deductions or credits that reduce liability.

Investors subject to additional tax obligations, such as the Alternative Minimum Tax (AMT) or NIIT, may benefit from professional advice to optimize tax strategy. Those with significant tax-loss harvesting transactions should ensure proper reporting of carryforward losses to avoid missed deductions. Major financial changes, such as receiving an inheritance, exercising stock options, or starting a business, may also require specialized tax planning to prevent unexpected liabilities.