Yes. Fidelity does report to the IRS. Federal law requires U.S. brokers and financial institutions to file information returns on taxable activity in client accounts, and Fidelity sends the IRS the same figures that appear on the tax forms it sends you.1Office of the Law Revision Counsel. 26 USC 6045 – Returns of Brokers Most of that reporting is packaged into a single consolidated 1099 statement combining your 1099-DIV, 1099-B, 1099-INT, and 1099-MISC.2Fidelity. Understanding Your 1099 Tax Form The IRS then runs an automated match between what Fidelity filed and what you put on your return.
What Fidelity Reports on a Taxable Brokerage Account
If you have a regular, non-retirement account, three kinds of activity get sent to the IRS every year: dividends, interest, and securities sales.
Dividends
Fidelity files Form 1099-DIV for any account that received at least $10 in dividends or other distributions during the year.3Internal Revenue Service. Instructions for Form 1099-DIV The form splits ordinary dividends, which are taxed at your regular income tax rate, from qualified dividends, which are taxed at long-term capital gains rates.4Internal Revenue Service. About Form 1099-DIV, Dividends and Distributions Capital gain distributions from mutual funds appear on the same form and get long-term treatment regardless of how long you held the fund shares.
Interest
Interest of $10 or more in your taxable account triggers a Form 1099-INT filing with the IRS.5Internal Revenue Service. About Form 1099-INT, Interest Income Bank deposit interest, CDs, corporate bonds, and Treasury interest all fall under this. Municipal bond interest is also reported to the IRS on the 1099-INT even though it’s generally exempt from federal tax, so you still need to include it on your return. Depending on your state and the bond’s issuer, you may owe state or local tax on it.
Securities sales
Every sale of stocks, bonds, mutual fund shares, options, or other securities in a taxable account is reported on Form 1099-B.6Internal Revenue Service. About Form 1099-B, Proceeds From Broker and Barter Exchange Transactions Fidelity reports the gross proceeds, the acquisition and sale dates, and whether the holding period was short-term or long-term.7Internal Revenue Service. Instructions for Form 1099-B
Cost basis is reported to the IRS only for “covered” securities, meaning shares acquired after brokers became legally required to track basis: January 1, 2011 for most stocks, 2012 for mutual funds and ETFs, and 2014 for bonds and options. For anything acquired earlier, or transferred in from outside without basis information, the cost basis column on the 1099-B is blank and you’re responsible for figuring out the correct number yourself.
Wash sales are also flagged. If you sold a security at a loss and bought a substantially identical one within 30 days on either side of the sale, Fidelity reports the disallowed loss on the 1099-B.7Internal Revenue Service. Instructions for Form 1099-B It only catches wash sales within the same account, though. Wash sales that cross accounts or brokerages are your responsibility to track.
What Fidelity Reports on Retirement Accounts
IRAs and employer-sponsored plans don’t generate annual dividend or capital gain reporting, because the earnings inside are tax-deferred or tax-free. Reporting focuses on two events: contributions in and distributions out.
Contributions
Fidelity files Form 5498 with the IRS for every Traditional, Roth, SEP, and SIMPLE IRA it holds.8Internal Revenue Service. About Form 5498, IRA Contribution Information The form reports total contributions for the tax year, including prior-year contributions made between January 1 and the April filing deadline. It also reports the December 31 fair market value and flags whether a required minimum distribution is due for the following year. RMDs generally start the year you turn 73.9Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs For 2026, the IRA contribution limit is $7,500, with a $1,100 catch-up if you’re 50 or older.10Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
Fidelity isn’t required to send Form 5498 to you until May 31, after the April filing deadline.11Fidelity. What Is Form 5498 You don’t need the form to file, because you already know what you contributed. It mainly lets the IRS verify you stayed within the limits.
Distributions
Any withdrawal from a retirement account gets reported on Form 1099-R, whether it’s an RMD, a Roth conversion, a rollover, or a cash withdrawal.12Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. The form shows the gross distribution and the taxable portion, along with a distribution code that tells the IRS what kind of withdrawal it was.13Internal Revenue Service. Instructions for Forms 1099-R and 5498 That code determines whether the distribution is fully taxable, partially taxable, or tax-free, and whether the 10% early withdrawal penalty applies. A direct rollover isn’t taxable; an early withdrawal before 59½ usually is.
Health Savings Accounts
If you hold an HSA at Fidelity, contributions are reported on Form 5498-SA and distributions on Form 1099-SA.14Internal Revenue Service. About Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information15Internal Revenue Service. About Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA The 2026 HSA contribution limits are $4,400 for self-only coverage and $8,750 for family coverage.16Internal Revenue Service. Rev. Proc. 2025-19 The 1099-SA tells the IRS how much came out, but it doesn’t tell them whether you spent it on qualified medical expenses. You report that on Form 8889 with your return. Distributions used for non-medical expenses are taxable and hit with a 20% penalty unless you’re 65 or older. If you didn’t take any distributions, you won’t get a 1099-SA.
Cryptocurrency and Other Digital Assets
Beginning with tax year 2025, brokers that facilitate digital asset transactions have to report sales on the new Form 1099-DA.17Internal Revenue Service. About Form 1099-DA, Digital Asset Proceeds From Broker Transactions For 2025, only gross proceeds get reported. Cost basis reporting becomes mandatory for tax year 2026, but only for digital assets acquired on or after January 1, 2026 and held continuously in the same broker account until sale. Anything acquired earlier or transferred in from an outside wallet is treated as non-covered, so you’ll need your own records to establish basis.
Situations That Trigger Extra Reporting or Withholding
Backup withholding
If you never gave Fidelity a correct Taxpayer Identification Number, or the IRS notified Fidelity that you previously underreported interest or dividends, Fidelity must withhold 24% on payments like interest, dividends, and sale proceeds.18Internal Revenue Service. Backup Withholding19Office of the Law Revision Counsel. 26 USC 3406 – Backup Withholding The withheld amount shows up on your 1099 and you claim it as a credit on your return. Fixing the underlying issue with Fidelity, usually a mismatched Social Security number or a missing W-9, stops the withholding going forward.
Foreign accounts
A boundary worth naming: the FBAR reporting requirement, which applies if you’re a U.S. person and your foreign financial accounts exceeded $10,000 in aggregate at any point in the year, is your personal filing with FinCEN, not Fidelity’s.20FinCEN.gov. Report Foreign Bank and Financial Accounts21U.S. Department of the Treasury. Foreign Account Tax Compliance Act22Internal Revenue Service. Foreign Account Tax Compliance Act (FATCA)
Section 1256 contracts
Regulated futures, foreign currency contracts, and options on broad-based indexes may qualify as Section 1256 contracts. Fidelity reports the gains and losses on Form 1099-B, and they get 60/40 tax treatment: 60% long-term, 40% short-term, regardless of holding period.23Office of the Law Revision Counsel. 26 USC 1256 – Section 1256 Contracts Marked to Market Open positions are marked to market at year end, so unrealized gains and losses on December 31 are treated as if you sold. You report the totals on Form 6781 and carry them to Schedule D.
What Happens If Your Return Doesn’t Match Fidelity’s Report
The IRS runs an Automated Underreporter program that matches every 1099 it receives against the corresponding line on your return.24Internal Revenue Service. Topic No. 652, Notice of Underreported Income – CP2000 When something doesn’t line up, an examiner reviews it and sends a CP2000 notice proposing changes.
A CP2000 isn’t an audit and isn’t a bill. It’s a proposal showing what you reported, what Fidelity reported, and the difference. You generally have 30 days to respond, either agreeing or explaining why the IRS number is wrong.
If you do owe more tax, interest runs from the return’s original due date. For the first quarter of 2026, that rate is 7% per year, compounded daily.25Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026 A 20% accuracy-related penalty can also apply if the understatement is substantial, meaning more than the greater of $5,000 or 10% of the tax that should have been on the return.26Internal Revenue Service. 27Internal Revenue Service. General Instructions for Certain Information Returns Because Fidelity consolidates the forms, you may receive everything on the later date. Form 5498 doesn’t arrive until May 31.11Fidelity. What Is Form 5498
If a form is wrong, ask Fidelity for a correction. The brokerage reissues the same form with the “CORRECTED” box checked at the top. If you’ve already filed, you’ll need to amend on Form 1040-X. Filing before your final consolidated statement is one of the surest ways to trigger a CP2000 months later, because the IRS’s copy is what it will match against your return.