Taxes 2022: What to know about reporting meme stock gains

Private Wealth Advisor Rocco Carriero joins Yahoo Finance Live to discuss reporting meme stock trades on your taxes.

Video transcript

BRIAN CHEUNG: Once you rewind to the meme stock frenzy of January 2021 in this segment as part of our Taxes Made Simple series, presented by Tax Act, if you were bagging some [INAUDIBLE] off of AMC or GME, it's likely the case you're going to have to let the IRS know, in addition to the Reddit threads themselves.

Rocco Carriero is Wealth Partners founder and private wealth advisor, who's been looking into the proper way to be reporting these things. Rocco, a simple question here. Let's say you made some money on Robinhood off of those meme stocks in 2021. How do you report that as you're in the final days of filing for the season?

ROCCO CARRIERO: Well, most financial institutions would be sending you out some type of a 1099 document that you would have received sometime late January up through the middle of March. But even if you didn't receive that information from the financial institution, it's still your responsibility to reach out to the financial institution where you do have your assets and make sure you get that documentation, because you are still going to be responsible for the taxes, should you have made some gains.

BRIAN CHEUNG: All right, so but that means that you would have had to sell your holdings. So let's say, for example, you're still HODLing. You don't have to report it, right?

ROCCO CARRIERO: Yeah, if you're still holding those holdings that you've had some gains with, but you haven't sold them, you don't. But if you own a security that happens to be paying a dividend, you could be responsible for the income that that security is being generated for you.

BRIAN CHEUNG: OK, how about the people that didn't get income because they lost a bunch of money because they bought at the top and then they sold at the bottom?

ROCCO CARRIERO: That's another great point. People that were messing around with trying to speculate on certain securities and ended up by losing money, they should receive those tax forms as well. If you have a loss, you want to be able to either use that loss against your gains, or you want to-- if you have no losses to offset-- if you have no gains to offset your losses with, you want to be able to carry those forward on your tax return for the future, whether you get a income tax deduction as a result of it or if you could offset your future gains against your losses. Really good point.

BRIAN CHEUNG: How do you do that if you want to carry it forward? Because is that something that the basic tax software can allow you to do? That sounds a little advanced.

ROCCO CARRIERO: Yeah, I believe the basic tax ware-- basic tax software program would allow you to do that. However, what we always suggest is that people do consult and work with a qualified tax advisor, just to make sure they're doing everything correctly. That's usually a good rule of thumb. Because, again, if you make a mistake through using some type of a software program, and you said, well, I really didn't understand it, you are still responsible for the penalties and the interest that's associated with the gain or the loss.

BRIAN CHEUNG: And running out of time, right? April 18, I believe, is the final date here.

ROCCO CARRIERO: That's correct unless you file an extension, which a lot of people seem to be doing. We've been pretty lucky over the past few years by having the tax deadlines extended due to COVID. But this year, I guess it's required to be on time.

BRIAN CHEUNG: All right, well, I've got mine done already. So at least, I'm good on that front. Rocco Carriero, Wealth Partners founder and private wealth advisor, thanks so much for stopping by Yahoo Finance this morning.

ROCCO CARRIERO: Thank you. Thank you for having me. Thank you.