The IRS has different tax forms for every type of income imaginable. With investing, that can quickly get complicated and lead to mistakes. At the very least, you should have a basic idea of what the tax forms do and which forms to expect each year. That alone will give you a better picture of your tax costs, allowing you to build a more tax efficient portfolio .

Investment income comes in three forms: earned interest, dividends, and capital gains. Each is taxed differently. Earned interest is regular income subject to federal income tax while dividends and capital gains has its own tax rates .

Youll get separate tax forms for each income type. But theres a good chance youll get multiple forms for each investment too. For instance, TD Ameritrade sends me a consolidated 1099 every year for the stocks and ETFs I own, which is just a 1099-INT, 1099-DIV, and 1099-B rolled into one big statement. Below are the more common tax forms youll receive for investment income.

Form  1099-B

• What is It?. A 1099-B reports the sale of an investment to the IRS. Your 1099-B has all the cost basis information: buy and sell price, dates, and type of capital gain or loss.
• Income Type. Capital Gains
• Investment. Stocks, Bonds, ETFs, and Mutual Funds

This can come as one 1099-B per sale, but typically most brokers and fund companies now send a consolidated 1099 tax form with every sale included. The information on form 1099-B is then used to fill out your Schedule D. Learn more about form 1099-B .

This guide on cost basis covers everything you need to know about cost basis reporting and tax savings.

Form 1099-DIV

• What is It?. 1099-DIV reports any dividends and distributions paid to you during the tax year. This includes reinvested dividends (DRIPs), qualified dividends, nondividend distributions, mutual funds capital gain distributions, and withheld taxes.
• Income Type. Dividend Income or Capital Gains
• Investment. Dividend Stocks, Preferred Stocks, REITS, Collectibles, Mutual Funds, and ETFs

Form 1099-DIV can be tricky. Not all the reported income is taxed as dividends. For instance, a funds capital gain distribution is taxed as a long-term capital gain. Yet, a nondividend distribution is a return of capital (it offsets your initial cost basis) which you wont pay taxes on until you sell the investment. Heres a break down of form 1099-DIV .

Form 1099-INT

Banks, brokerages, and fund companies must send a 1099-INT if you earned at least $10 in interest. If your earned interest exceeds a certain amount you are required to fill out a Schedule B. Find out more about form 1099-INT .