Friday, January 27, 2017

Waiting for 1099s to Come In

Like many people, I am waiting for the last of my 1099 forms from banks and brokerages for tax year 2016. Together with these 1099s and my W-2 form, I have should all the data that I need to start on my tax returns.

Historically, these 1099 forms were sent out by January 31st. For investors, however, there are certain items that will delay your forms to at least February 15th. The usual suspects are mutual funds (especially foreign funds), Exchange Traded Funds (ETFs), tax-free bonds, and dividend paying stocks. For mutual funds, there are four categories of distributions: long-term capital gains, short-term capital gains, dividends, and non-qualified dividends. ETFs will sometimes declare a distribution in December, but not pay you until January. Unfortunately, you need to pay taxes on these funds in your prior year's taxes. Sometimes, foreign mutual funds need to calculate the foreign taxes paid by the fund. This calculation often takes a while for the fund to figure out. Foreign taxes paid can be taken as a credit on your U.S. taxes.

These are just a few of the reasons why you may still be waiting for your 1099 forms well into February.

Disclaimer: PF Stock does not provide tax advice. I encourages readers to consult with a tax adviser if they have specific questions about 1099 forms or filing their taxes.