July 2013: Tax Statements Analysis

This Broker Monitor Report reviews annual year-end tax statements that include the official 1099 as well as supplemental reports. Based on our analysis, brokerage firms that ranked highly tend to provide greater detail, noting important non-reportable tax information ranging from realized gain/loss to annual fees, margin interest and income details. All highly ranked firms also provide comprehensive supplemental details for each 1099 form. These firms also provide a statement that is clearly organized, easy to navigate and readable. Since much of the content on tax reporting statements are required and regulated by the IRS, the differences in scores were mainly dependent on the depth of supplemental information and the overall design and layout of each statement.

Across all brokerages reviewed in this report, full-service firms ranked an average of 3.35 out of 4. As a group, self-directed firms averaged slightly lower than full-service firms with 3.33 out of 4 points.

Overall, firms averaged lower across all Design sub-categories and ranked 3.43 out of 4. Unlike monthly account statements, there is little room to customize tax statements or provide flexibility in terms of how content is displayed. However, firms that ranked high in the overall Design category provide a uniform layout that extends from official 1099 forms to supplementary content. The firm that ranked the highest in this category offered a uniform tax statement design, and provided content within a clear and readable format.
Additional Key Findings:

  • All firms include supplementary content with applicable 1099 forms
  • 55% of brokerage firms provide a cover that precedes the official 1099 forms
  • 77% of firms provide security-level gain/loss figures alongside reportable 1099-B figures