Form 1099-B field reference
Form 1099-B Box 4: Federal income tax withheld
Form 8949 destination
Not a Form 8949 gain/loss adjustment
Reconcile this field with the rest of the transaction before calculating gain or loss. A Form 1099-B label does not override the official basis, holding-period, or adjustment rules.
Before filing
What to check
- Match the amount to the year-end broker statement.
- Do not subtract it from Form 8949 proceeds or add it to basis.
- Include it with the federal withholding claimed on Form 1040.
How it works
Box 4 mechanics
Box 4 almost always represents backup withholding under IRC §3406, not voluntary tax withholding the way a paycheck or a 1099-R distribution might show. Backup withholding at a 24% statutory rate is triggered when a broker doesn't have a certified taxpayer identification number on file, when the IRS notifies the broker that a payee has underreported interest or dividends in the past, or when required certifications about exempt status weren't made. Because it applies to the gross transaction rather than to the calculated gain, backup withholding can appear on a sale that actually produced a loss — the withholding isn't tied to whether the trade was profitable. It's claimed alongside other federal income tax withholding on Form 1040 exactly like withholding from a W-2 or 1099-R, and it never adjusts the Form 8949 proceeds, basis, or gain/loss figures.
Worked example
A taxpayer's broker withheld $240 in backup withholding — 24% of $1,000 in reportable proceeds — because a Form W-9 was never filed with the account. The $240 is claimed as federal income tax withheld on Form 1040. It doesn't change the Form 8949 gain calculation at all; the capital gain or loss is figured independently of the withholding.
Box 4 FAQs
Why would a broker withhold tax on a stock sale?
Almost always backup withholding, most commonly triggered by a missing or mismatched taxpayer identification number on file with the broker.
How do I stop backup withholding on future trades?
File or correct a Form W-9 with the broker. Once your taxpayer ID certification is on file correctly, withholding on future transactions generally stops.