Tax season is upon us. So, let’s make sure your accountant has everything he or she needs from an investment standpoint.
First on the list are 1099s. You might have: 1099-DIV, -INT, -B, for example. These report monies like interest, dividends, and capital gains and they’re critical to accurately preparing your return. If you did an IRA distribution or a 401(k) rollover, then make sure you get your 1099-R. This form reports to the IRS any distribution from a retirement account. Even when a rollover is completed properly and no tax is ultimately owed, the IRS may interpret the distribution as unreported income, which can lead to potential tax issues.
Also, don’t forget that some 1099s aren’t available until February or even March. This delay has to do with the type of investment in the account. Certain investments – like partnerships, real estate funds, or other alternative holdings – take longer to calculate their final income and tax figures. So, your custodian can’t issue a finalized 1099 until those numbers are determined.
Did you make an IRA contribution? If not, you still have time. Let your accountant know how much and into which account: Traditional or Roth. Some people like to have their tax returned prepared and then determine their IRA contribution.
If you use a 529 college savings plan, you’ll want to inform your accountant of any contributions or withdrawals. Contributions don’t receive any federal tax breaks, but they can at the state level.
The bottom line is that your accountant and your investment advisor work best as a team. If you’re not sure which documents apply to you, where to find them, or if you’d like us to coordinate directly with your accountant, reach out to us.
