Photo by Jeffrey Blum on Unsplash
With high temps still below freezing and the promise of spring not far away, you may be using this time of year to complete your 2021 tax return, especially if you are from the land of 10,000 frozen lakes, like I am. Perhaps the only thing you need to finish your taxes is your 1099 form from your brokerage account.
You check your mail every day, but just like an on-line order suffering from supply chain issues, it just isn’t there.
Should you be worried?
These days most brokerage firms mail their 1099 reports in two batches. The first wave goes out sometime between late January and early February. Unless you have a super basic account that doesn’t hold non-proprietary mutual funds, stocks, exchange traded funds you likely are NOT part of the first batch.
Most people who own brokerage accounts will receive their 1099 tax document in a later batch which is typically mailed in mid to late February.
This is because of the time it takes for mutual fund companies and other investments to provide the tax data to your brokerage firm. Once they receive it, the information is processed and provided in your 1099. If the brokerage firm only offers their own proprietary investments, this process can be pretty quick and you may get your 1099 early.
Many brokerage firms, however, offer investments from many different companies not just their own. Rather than rush the information out the door only to have issue an amended 1099 later, most brokerage firms wait until they have all the relevant information before mailing out 1099 documents.
I have a brokerage account, why didn’t I get a 1099?
There are three primary reasons why you may not have received a 1099.
First, you are probably in the second batch, and it simply hasn’t been mailed out yet. No worries. It’s on the way. If you don’t receive it by the end of February, contact your financial advisor or brokerage firm to see if it’s been mailed
Second, you changed addresses and did not update your brokerage firm. Or perhaps, your brokerage firm doesn’t have your complete, correct address – maybe the zip code is off or a house number is off a digit.
If you don’t receive your 1099 by the end of February, contact your advisor or brokerage form and ask why. Be sure to confirm they have the correct mailing address.
Third, there is no 1099 to send. A 1099 will be generated if you have an IRA brokerage account AND made a distribution from your account. People who did not take a distribution from their IRA will not receive a 1099 from that IRA.
A 1099 will also be generated if you have a non-IRA brokerage account AND your investments paid a dividend or interest, or you sold investments during the year. Almost everyone who owns a non-IRA account will receive a 1099 by the end of February. If there’s been zero taxable activity in your account, you may not receive a 1099.
If you are really chomping at the bit to get your taxes done ASAP, the information you are looking for can be often found on your December account statement. Frequently, your monthly brokerage statement will include a summary of interest, dividends paid for the year. Likewise, if there have been any transactions that resulted in a gain (loss), it will be included on your statement as well.
When your 1099 arrives, you can use it to confirm and document the accuracy of your numbers before filing your return.
My advice: Be patient. Your tax documents will arrive soon. If you must, complete your tax return using the info on your December statement and confirm your inputs with your 1099 when it arrives later this month.
If you have questions regarding your brokerage account 1099 consult your brokerage professional or brokerage firm for more information. For tax related questions consult an appropriate tax professional.
To discuss any of the topics in this blog or to learn more about how we can help you Cross The Bridge To A Confident Retirement, please contact me through my web site mikebranch.net, call me directly at 651-379-3935 or email me at mpbranch@focusfinancial.com.