It’s that time of year when the question arises, as it always does: “when will I get my 1099 tax forms?” For most people, the answer is soon. There are two basic types of tax forms that investment clients will often receive, the 1099-R and the (Consolidated) 1099.
The 1099-R reports distributions from IRAs (as well as pensions, annuities, and retirement accounts). These are often the earliest forms to report because in most cases it simply reports distributions and tax withheld. As of 1/21/2020, we were already seeing these forms show up for our clients.
The 1099 form (or in many cases titled Consolidated 1099) lists out buy and sell transactions that were reported from the investment company. Often included as well is the cost basis information on the securities with the 1099. This will list out what you bought the investment for, and you will be able to calculate the resulting capital gain or loss. If you do not have cost basis listed in the 1099 documentation, you will have to do some digging into previous statements to determine how much you paid for your securities. This is often received in late January or early February.
How Will I Receive My Forms?
In most cases, forms will be received by mail. This is one of the cases where investment companies haven’t seemed to have made big pushes to move to electronic means of distribution. For those that are more online oriented, tax forms are almost always posted on your client facing website (for example, TD Ameritrade 1099 forms can be found at advisorclient.com under documents).
For those that are more DIY oriented, many tax software programs, including TurboTax, have import tools that allow 1099 forms to be imported from the investment company into your software. This saves data entry time, particularly if you are active in trading your securities. A word of caution - you will definitely want to make sure you are checking the import to assure the data comes in correctly and not just assume that it is totally correct. There can be instances where old investments will be missing or have incomplete cost basis information and it may be imported as a zero basis or incorrect amount. It pays to double-check so you don’t unknowingly pay too much in tax (or get one of those nastygrams from the IRS - nobody likes those!).