It’s not unusual to receive an IRS notice about an unreported sale of stock and the money you owe for it, warns Haywood. Sometimes, filers fail to report the sale, especially if it didn’t bring any profit. But the IRS is watching, you know that!
The IRS will know about the gross sale amount and you will be notified about owing taxes on the proceeds, regardless of the fact that you lost money on the transaction.
If you don’t want to get a huge bill, report the amount you sold the stock for and your cost or basis in the stock. This will help you lower your taxable amount. “If you get the notice, don’t panic. Simply amend your return, showing both the proceeds and your cost, and likely you won’t owe as much — and maybe won’t owe at all,” Haywood says.
See also: How to Prepare Yourself (and Your Finances) for COVID-19 in 2021
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