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Let's face it, nobody throws a party to celebrate tax season. But if you're a pretty active trader, being on top of your IRS paperwork is as crucial as knowing the difference between bull and bear markets.

With a myriad of forms fluttering out from the IRS each year, it's essential to keep your eyes peeled for the ones that matter to you. So, buckle up, and let's dive into the riveting world of tax forms!

Quick Note:Are you an extremely active trader? Like, multiple large trades a day every day throughout the year? In other words... do you trade like it's your business? If so, you possibly qualify for special tax elections designed for full-time traders in the business of buying and selling securities. While this special status comes with some nice benefits — deducting expenses related to trading, being able to write off an unlimited amount of losses — they only apply if you meet the IRS's qualifications. If you think you may be eligible, talk to your financial advisor or tax professional.

Essential IRS Tax Forms for Traders

Ready to decode the alphabet soup of IRS forms? Here are eight common IRS forms and schedules you'll likely need to receive or fill out before you file your taxes.

First, let's look at the forms you'll need to receive before you start filling anything out. Your friendly brokerage platform and/or bank will be sending you any forms you need (or dropping a downloadable version into your account's online portal), so you should have access to all the details you need without pulling out your hair.

1) Form 1099-B: Proceeds from Broker and Barter Exchange Transactions

Ever wanted to look back at every trade you've made? Form 1099-B is your new best friend. This document reports your capital gains and losses for the tax year, and includes a detailed list of all your reportable investment activity in that specific brokerage account. That means every single transaction (including short sales) involving stocks, options, futures, commodities, crypto, currency spreads... pretty much anything you can trade in your account.

If you're the proud owner of multiple brokerage accounts, you'll need a 1099-B from each, and yes, that includes sorting out any wash sales with your spouse's accounts too.

Your broker will provide this form to you, usually by mid-February at the latest.

2) Form 1099-DIV: Dividends and Distributions

If dividends are your jam, this form is where it's at. You'll get this form if you've received more than $10 worth of dividends or distributions during the tax year from any type of investment.

Special note: If dividends are really your jam (and you received more than $1,500 in taxable interest and/or ordinary dividends during the year), you'll have to fill out Schedule B, an extra form that goes with your general 1040 form.

Your broker (or bank) will provide Form 1099-DIV to you, usually by early February.

3) Form 1099-INT: Interest Income

This one's for the interest buffs. Got income from bonds or even your high-yield savings account? If a brokerage firm, bank, mutual fund, or other financial institution paid you more than $10 in interest during the tax year, you'll receive this form.

Your broker (or bank) will provide this form to you, usually by early February.

4) Some Other Niche Forms to Look Out For...

Form 1099-MISC:Big-time crypto trader? If you received more than $600 of income (or crypto) as a mining reward, staking reward, or even just a referral reward, you'll likely receive this form.

Form 1099-OID:Do you own a lot of bonds? You may receive this form, which reports income from bonds that were issued at a discount and provide annual interest.

Unfortunately, sitting back and collecting forms is the easy part of tax season. Once you've received all this various paperwork, you'll need to fill out as part of preparing and filing your tax return. Here are the big ones.

5) Form 1040 (aka, Your Federal Taxes)

This is the main tax return form where you report your overall income, deductions, and tax liability. We all have to fill this one out, whether you're a daily trader or you've never owned a stock in your life.

Depending on your specific tax situation and any credits or deductions you take, there are a number of additional forms ("schedules") that you may need to tack on to it. Here are the forms you'll most likely need to file to report your trading returns and income.

6) Schedule B (Interest and Ordinary Dividends)

This form is used to report interest and ordinary dividend income over $1,500. This includes interest from your high-yield savings account and dividends from stocks and mutual funds.

7) Schedule D (Capital Gains and Losses)

If you're a trader, this form is essential. This is where you'll report your overall capital gains and losses from trading and investing. Essentially, it summarizes the totals from all your trading activities, giving the IRS a high-level snapshot of your financial moves for the tax year.

And yes, even though your broker has already provided you (and the IRS) with a detailed Form 1099-B listing every transaction, Schedule D is still a must. This is also where you'll report any carry over losses from previous years or deal with any undistributed capital gains.

But before you fill out Schedule D, you'll need to fill out...

8) Form 8949

This is where you'll report all the information provided to you on the various 1099-B forms you received for any brokerage accounts you have. It will also help you account for any adjustments that might not be reflected on each individual form. Certain tax software can automatically transfer these details to your tax return, which can save you time if you have hundreds or even thousands of transactions.

Once you've listed all of your transactions, you'll total the amount in each column to get your net results. You'll then use this information to fill out some of the lines on Schedule D.

When You Need to Consult a Tax Professional...

Look, this stuff is dense. It's my job to write about it, and even I find myself double and triple checking which forms apply to what and who needs to supply what information to where. Also, this is by means a completely exhaustive list of every form you may receive or need to complete for tax time.

If you made (or lost) a substantial amount of income from trading or investing in a single tax year, I would highly recommend consulting with a tax professional, or at least having one check your work. It's not worth the headache or penalty getting it wrong and having to do all this work all over again.