Tax glossary

It’s likely that you’ve seen some of these tax related terms in correspondence from M1. This article provides insight into some of our most used tax terms.

M1 Invest

M1 Invest refers to all your investment accounts – Individual/Joint Brokerage Account, Traditional IRA, Roth IRA, SEP IRA, Custodial Account, Crypto Account, and/or Trust Account.

  • Dividend: Distribution of a company’s profits to its shareholders
  • Qualified: Taxed at the capital gains rate, which is typically considered favorable
  • Non-qualified: Taxed at your ordinary tax rate
  • Interest: Money paid regularly at a particular rate in exchange for money lent
  • Backup withholding: Tax required to be withheld by the payer to ensure the IRS receives the tax due on income
  • Miscellaneous income: Types of income that would not otherwise be reported on a 1099, including but not limited to promotional bonuses, referral bonuses, and ACAT bonus payments
  • Cost basis: Price paid to purchase a security, in addition to any fees at the time of purchase
  • Capital gain: A gain that is incurred for selling a security at a higher price than it was purchased for
  • Short term: Security that was held for one year or less prior to its sale
  • Long term: Security that was held for longer than one year prior to its sale
  • Capital loss: A loss that is incurred for selling a security at a lower price than it was purchased for
  • Short term: Security that was held for one year or less prior to its sale
  • Long term: Security that was held for longer than one year prior to its sale
  • Form Consolidated 1099: Tax document delivered annually in February to taxable accounts to report security sales, reportable dividends or interest received, or reportable miscellaneous payments received in the previous calendar year
  • Form 1099-R: Tax document delivered annually in January to retirement accounts to report any withdrawals in the previous calendar year
  • Form 5498: Tax document delivered annually in May to retirement accounts to report any contributions or rollovers for the previous calendar year

M1 Spend

M1 Spend refers to your Owner’s Rewards Card by M1.

  • Interest payment: Payment made monthly at a particular rate
  • Form 1099-INT: Tax document delivered annually in January to M1 Spend accounts that have received more than $10.00 interest in the previous calendar year
  • Owner’s Rewards Card by M1 Annual Percentage Rate (APR): A number that represents the total yearly interest rate if a balance is carried on this card

M1 Borrow

M1 Borrow refers to your Margin and Personal Loans.

  • Annual Percentage Rate (APR): A number that represents the total yearly cost of borrowing money, expressed as a percentage of the principal loan amount
  • Personal loan APR: Rates are based on a series of factors including the information on your credit report, your loan amount and term, and the details provided within your application
  • Margin: The M1 Margin Loan rate is based on short-term interest rates and is subject to change if and when the Federal Reserve changes its target for the federal funds rate

If you have further questions, please contact us.

 

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.

All investing involves risk, including the risk of losing the money you invest. Borrowing on margin can add to these risks, and you should learn more before borrowing. M1 Margin Loan available on margin accounts with at least $2,000 invested. Not available for all account types including M1 Traditional IRA, M1 Roth IRA, M1 SEP IRA, M1 Custodial, and some M1 Trust Accounts. Margin Loan rates subject to change.

M1 disclosures here.

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