Investments

For many taxpayers, reporting interest and dividends on investments is very simple. Just collect all the 1099-INT and 1099-DIV forms you receive at the beginning of 2014, enter the amounts in Schedule B of Form 1040 or Form 1040A, add up the totals, transfer them to the front page of your main tax form, and you're done.

However, if you bought or sold any investments during the year, or if you had any of the many types of investments that follow special rules, including mutual funds, tax-free municipal bonds or bond funds, U.S. Savings Bonds, OID interest, nominee interest, amortizable bond premiums, accrued interest, foreign investments, or income from partnerships, S-corporations, trusts, or estates, your situation will be a little more complicated.

In addition, a 3.8 percent net investment income tax may be imposed on individuals whose modified adjusted gross income exceeds $250,000 for joint filers, $125,000 for married taxpayers filing separately, and $200,000 for others. Trusts and estates with income over a certain amount are also subject to the NII tax. The net investment income tax rules might cause you to reconsider the type and timing of your investment activities.

In this section, we'll also discuss the rules for reporting:

• interest
• dividends
• foreign investment accounts and trusts
• stock, bond, and other capital asset sales
• income from estates and trusts
• income from partnerships, LLCs and S Corporations
• royalty income
• income from REMICS

You may also have some investment-related deductions for interest, investment advice, financial publications or software, or custodial fees. We'll help you deal with those as well.

If you have a child with investment income, you may have the option to report that income on your own return, or to file a separate tax return for the child.

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