Do I have to pay taxes on money I make through my Acorns account?

This is provided for informational purposes only. Acorns does not provide tax or legal advice. You should consult with a tax or legal professional to address your particular situation.

In general, when we earn money from our investments, Uncle Sam wants his cut, too—just like with the rest of our income.

But investment gains are more complicated than salaries. You may end up owing taxes on your investments, even if you didn’t sell them. And you might end up owing nothing, even if you did.

Note: This information applies to Acorns Invest and Acorns Early accounts. For information about taxes and Later accounts, click here.

I didn’t make any withdrawals from my account or sell any investments this year. Do I owe taxes?

Potentially. You may owe taxes on any dividends you earn. Dividends are companies’ ways of thanking you for investing with them. You get them simply for holding a stock or fund on a certain date. Acorns automatically reinvests those for you, but you may still owe taxes on them.

Your 1099 form will note any dividends you receive in the 1099-DIV section if you earned more than $10 in dividends in the previous year. You can check to see what dividends you received by visiting the Recent Activity section in your investment accounts. 

You may also owe taxes if you received a referral bonus last year or earned Earn Rewards through a partner that didn’t require you to buy anything from them. Your 1099 form will note any bonuses and Acorns Earn offers you received exceeding $600 in the 1099-MISC section.

You may need to report values found on the 1099-DIV and 1099-MISC as earned income when you file your taxes.

You may also owe taxes if there was a rebalance in any of your Acorns accounts. The 1099-B section notes any taxable gains that may have occurred due to any rebalances. You may need to report values found on the 1099-B.

Be sure to talk to your CPA or tax professional or visit the IRS website to help determine which situation applies to you.

I made a withdrawal from my account or sold investments this year. Do I owe taxes?

Probably. In addition to owing taxes on any dividends you may receive and any referral bonuses or Earn Rewards you earned (described above), you may also owe taxes on any gains or losses from your investment activity in your Acorns Invest account. 

Timing matters here. Investments that you’ve had for less than a year that you sell at a gain are treated like any other form of income, meaning you have to pay the same tax rate on any gains that you do for your salary.

But investments that you’ve had for more than a year are taxed at a lower rate. This is part of why it really can pay off to invest for the long term. 

The highest federal tax rate for long-term capital gains is 20 percent—and that only applies to taxpayers whose total taxable income is well into the $400,000s. Those in the lowest bracket may not have to pay any taxes. To determine which tax bracket applies to you, check with your tax advisor or the IRS website.

Your 1099 form will note any dividends you received in the previous year in the 1099-DIV section. The 1099-MISC section will list any referral bonuses or Acorns Earn offers totaling more than $600 that didn’t require a purchase in the 1099-MISC section. The 1099-B section notes any taxable gains you may have made when you sold your investment. You may need to report these as earned income when you file your taxes.

To see the latest dates by which you can expect to receive your tax forms, please review our tax schedule here.

Be sure to talk to your CPA or tax professional or visit the IRS website to help determine which situation applies to you.