It is not uncommon to come across ads for apps like Stash, Acorn, Rize, and Robinhood, promising significant earnings resulting from small investments. This makes investing look easy and attractive, as we all might be looking for ways to get extra cash and increase our income. However, those who are new to the world of investments, and micro-investments in particular, need to be aware of the extra paperwork that might be needed for their earnings. There are several forms you might be needing, depending on how much you earned and what you did with those earnings. Here are some of the most common ones.  

One of the most common forms we should expect regarding our earnings from micro-investment apps is Form 1099-MISC. We will need this form if we earned any kind of cash bonuses or awards from any micro-investment app totaling $600 or more. These earnings will be taxed as income, so keep that in mind. We should also remember that this form has a different deadline than that of our income taxes, being January 31st of next year, so prepare beforehand and avoid missing the date.  

Another form you should be aware of is Form 1099-B, which you will receive in case you sold any of your investments during the tax year. This is because, every time you sell investments, you need to pay taxes on the profit, which is called capital gains. On the other hand, if you sell investments that represent a loss, you need to report such losses to the IRS. However, this might reduce your taxable income, and the tax rate may vary, depending on how long you had a given investment.  

If we have experience with investments, or if we were really lucky, our investments might do so well that a portion of them could be shared with other investors. If such was the case, we should be expecting to receive Form 1099-DIV for all investment dividend earnings that we withdraw. For these cases, the tax rate we may owe would depend on the level of our income and on how long we held such investment. We should also expect Form 1099-INT if we earned interests of more than $10 through any institution, including micro-investment apps.  

Even when the tax implications that come from micro-investments might sound too complex for us, we should not feel intimidated or confused by them. The amount of taxes that we would owe to the IRS depends greatly on our tax profile, and the chances of our investment earnings pushing us to a higher tax bracket are bare. Instead of being afraid, we should consult our finances and investment earnings with a professional tax consultant that can guide us through the process and helps us stay compliant with IRS rules and regulations.