Tax FAQ
Updated over a week ago

What tax forms will I receive?

The tax forms you’ll receive depend on the type(s) of account(s) you have. M1 Invest Accounts, M1 Checking Accounts, and M1 High-Yield Savings Accounts have tax forms generated based on the activity that took place in the account.

If one of your Investment Accounts was migrated from Apex Clearing to being cleared by M1, you will receive separate consolidated 1099s from both Apex Clearing and M1.

Apex is required to send tax documents covering the time your taxable Investment Account was cleared by them. You will receive an additional 1099 from M1 covering the time your account has been cleared by us.

You’ll receive a consolidated 1099 for each separate account cleared by Apex Clearing during the year and a single 1099 for all Individual Brokerage Accounts cleared by M1. If you have a Joint Brokerage Account, the primary accountholder will receive a 1099.

If your taxable Investment Account was never cleared by Apex Clearing, you will only receive a 1099 from M1.

For more information on what account activity results in a tax form, please visit our tax form resource center.

When will my tax forms be delivered?

Different tax forms have different delivery dates, but these are the most common at M1:

  • 1099-INT for M1 Checking Accounts: January 31

  • 1099-INT for M1 High-Yield Savings Accounts: January 31

  • 1099-R for M1 IRA withdrawals: January 31

  • Consolidated 1099 for M1 Invest Accounts: February 15*

  • 5498 for M1 IRA contributions: May 31

*If you hold a security that is subject to income reclassification in a M1 cleared (Individual or Joint Brokerage) account, you’ll receive your consolidated 1099 on February 29 to limit the potential for a revised 1099.

Please note that your account may be subject to a revised tax form. For more information on what may cause a revised tax form, please click here.

What are capital gains and capital losses?

The gain or loss that results from the sale of a security is referred to as a capital gain or a capital loss. The gain or loss and the length of time you held the security before selling will be used to determine how the transaction is taxed.

Short-term capital gains occur when a security is sold for more than its purchase price and was held for one year or less.

  • Short-term capital gains are typically taxed at the same rate as your ordinary income.

  • For the 2024 tax year ordinary tax rates ranged from 10% to 37%.

Long-term capital gains occur when a security is sold for more than its purchase price and was held for longer than one year.

  • For the 2024 tax year the long-term capital gain tax rates were 0%, 15%, and 20% for most taxpayers.

Capital Losses occur when a security is sold for less than its purchase price.

What is a wash sale?

A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:

  • Buy substantially identical stock or securities.

  • Acquire substantially identical stock or securities in a fully taxable trade.

  • Acquire substantially identical stock for your Individual Retirement Account (IRA) or Roth IRA.

A wash sale can occur in a taxable account or a tax-advantaged retirement account. Additionally, a wash sale may occur if the sale and subsequent purchase of substantially identical securities can take place in different accounts that you, your spouse, or your business owns.

Due to IRS regulations, M1 will adjust your cost basis to include the disallowed loss.

For more information on wash sales, check out the IRS Publication 550.

When is the deadline for making IRA contributions?

IRA contributions for the prior year can be made until the tax filing deadline. That means you have until April 15, 2024 to make 2023 contributions.

When making an IRA contribution through M1 from the start of a new year until then tax filing deadline, make sure to properly designate which tax year you want to make a contribution towards.

How much can I contribute to my IRA?

2024 contribution limits:

Traditional and Roth IRA: $7,000 ($8,000 if you’re age 50 or older) or your earned income, whichever is less

SEP IRA: $69,000 or 25% of your compensation, whichever is less

2023 contribution limits:

  • Traditional and Roth IRA: $6,500 ($7,500 if you’re age 50 or older) or your earned income, whichever is less

  • SEP IRA: $66,000 or 25% of your compensation, whichever is less

As a reminder, Traditional and Roth IRA limits are cumulative, meaning that the total amount deposited each year across all of your Traditional and Roth IRAs cannot exceed the values listed below.

Additionally, certain individuals may not be eligible to contribute directly to a Roth IRA due to their filing status or earned income. For questions about IRS income limits and your Roth IRA contribution eligibility, please consult a qualified tax professional.

What are the different tax treatments of Traditional and Roth IRAs?

Traditional IRA

  • There isn't an income ceiling for contribution eligibility

  • Potential earnings grow tax-deferred

  • Contributions may be tax-deductible based on your income and eligibility to contribute to an employer sponsored retirement account

  • You’re required to start Required Minimum Distribution (RMD) withdrawals at the age of 72 (73 if you reach age 72 after Dec. 31, 2022)*

  • Withdrawals are considered taxable income

  • Early withdrawals (prior to age 59.5) are typically subject to a 10% premature withdrawal penalty

Roth IRA

  • Eligibility to contribute is limited by IRS income qualifications

  • Potential earnings grow tax-free

  • Contributions are not tax-deductible

  • Required Minimum Distribution (RMD) withdrawal requirements do not apply

  • Withdrawals of your contributions are not taxed or penalized

  • No taxes owed on earnings if you’ve held the account for more than five years, you’re age 59.5 or older, or a special exception applies.

What are RMDs?

RMD stands for Required Minimum Distribution and is the amount of money the IRS says you need to withdraw from your pre-tax retirement account each year after turning 72 (73 if you reach age 72 after Dec. 31, 2022).* M1 accounts that require RMDs are traditional and SEP IRAs, while Roth IRAs do not require RMDs until after the death of the original owner.

Some key points:

  • You can withdraw more than the minimum required amount.

  • Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth IRA).

For more information on RMDs, please visit the IRS FAQ page.

*If you reach age 72 in 2023, the required beginning date for your first RMD is April 1, 2025, for 2024. If you reach age 73 in 2023, you were 72 in 2022 and subject to the age 72 RMD rule in effect for 2022. If you reach age 72 in 2022,

  • Your first RMD is due by April 1, 2023, based on your account balance on December 31, 2021, and

  • Your second RMD is due by December 31, 2023, based on your account balance on December 31, 2022.

M1 and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. It is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.

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