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Helpful Tax Form Insights for Investors

3 March 2015 in Investing Insights

With tax season, it is helpful to stay organized and be aware of which types of tax forms you may need to collect before filing your returns. In addition to being aware of how many tax forms one should receive for the previous year, and from which accounts, it is beneficial to understand what information is reported and why. The information reported on these various tax forms are used when preparing IRS 1040, so accuracy and timeliness are important.

Some of the reasons one may receive a tax form as an investor are capital gains, dividends, interest, and distributions, such as those from a retirement or annuity account.

Types Of Tax Forms Investors May Receive

There are various types of 1099 tax forms investors may receive, each with a different reporting purpose. Descriptions of some 1099 forms are below.

  • 1099-MISC: While 1099-MISC forms are typically sent to independent contractors reporting their annual payments received, versus W2s for employees, this form can also be issued for royalty income, prize monies, awards, rents, and other non-employee compensation.
  • 1099-R: Investors who received a distribution from a qualified retirement plan, IRA, profit sharing plan, or annuity that is not tax deferred, should be issued a Form 1099-R.
  • 1099-B: The Form 1099-B reports an investor’s annual capital gains or losses on publicly traded securities. Short-term versus long-term gains or losses are indicated as well as other transaction information such as cost basis, date of sale, ticker symbol, quantity sold, gross proceeds, and federal tax that is withheld.
  • 1099-DIV: This tax form reports what dividends received on certain securities, such as common stock, as well as capital gains and distributions. Ordinary dividends are reported separately from qualified dividends, and there is also a section that indicates any foreign taxes paid.
  • 1099-INT: Investors who received interest income typically receive a Form 1099-INT. CDs, money market accounts, bonds, and accounts or funds that hold interest bearing securities may trigger a 1099-INT. Interest below $10 is generally not required to be reported to the IRS.

Deadlines For Receiving 2014 Tax Forms

Brokers, investment advisors, funds, banks, and other institutions are required to generate tax forms for investors by specific IRS deadlines each year. Typically, the due date for forms to be mailed is January 31st, however this can vary based on the weekends’ fall on the calendar each year.

The deadlines for 2014 forms are illustrated below. Keep in mind tax rules are complex and there can be exceptions to the below. Further details are available at the IRS website.


Source: http://www.forbes.com/sites/kellyphillipserb/2016/01/16/when-to-expect-your-forms-w-2-1099-more-in-2016-and-what-to-do-if-your-tax-forms-are-late/#5b8708ba4d9a

Another point to note is that some investment firms may also issue consolidated 1099s to investors, which combine multiple 1099 forms into a single statement.

If you receive a 1099 tax form, check it for accuracy and report any incorrect information to the sender as soon as possible. Review your personal information including your tax ID and address, as well as all of the numerical figures. If errors are identified, the sender should be contacted to issue a corrected form both to the investor as well as the IRS.

Missing A Tax Form?

Expecting a tax form that has not arrived? While some senders are fast and may distribute forms to investors prior to the above deadlines, it may take until mid February for some forms to arrive depending on operations of the sender and the delivery service.

Sort through any piles of mail that the forms could have gotten jumbled in with, and check to ensure your address on file is up to date. And check your email inbox and spam folder in case the sender sent an electronic copy. A digital copy may be retrievable online within your account as well. If it still has not turned up, ask the account provider to resend a copy or contact the IRS if the sender cannot be located.

The IRS receives its own copies of the 1099 forms directly from the sources (ex. banks, IAs, brokers, etc.), and compares that data to what tax filers report on their 1040s. A mismatch can result in further investigation. To help reduce the potential risk of getting flagged, you many want to closely examine all tax forms you receive, and wait to file your 1040 until after everything is in order, but before tax filing deadlines.

Keep in mind sometimes you may not actually be missing a tax form because a taxable event didn’t occur. For example, interest received on tax-free treasuries, or interest earned in an IRA account may not trigger a federal tax form, and in those cases, may not be required to be reported to the IRS.

Does Motif Issue Tax Forms To Investors?

When you buy a motif, you own each stock it contains individually – that can be as many as 30 individual stocks for each motif. For each of those individual stock trades, Motif Investing’s clearing partner, Pershing LLC, will provide you with cost basis and proceeds documentation.

One advantage of owning the individual stocks is you have greater control over the potential realization of gains and harvesting of losses. You will receive a Form 1099 reporting the sale of any stock(s) made during the year. If you have questions when filing, we recommend consulting with your tax advisor regarding your individual situation.

Investors that created motifs from scratch using the Build a Motif feature may be eligible to receive royalties if entered in the creator royalties program. Every time someone purchases or rebalances a motif you have built, you will get $1. You do not receive royalties when people sell the motif or trade single stocks in/out of it. All royalties will accrue throughout the current quarter and will be paid to your Motif account. Motif Investing will also provide the appropriate tax form for you to report qualifying royalties received during the tax year.

Confirms are online for 1 year, statements are online for 2 years and tax documents for 5 years. You can access the electronic documents by selecting ‘Statements & Confirms’ under ‘My Investments’ in the top menu. Learn more in our in depth FAQ.

For questions regarding how charitable contributions can affect your tax situation, you should contact your tax advisor to see how contributions could affect your personal situation.  Motif Investing does not provide tax, legal, or estate planning information.

Photo Credit: http://www.forbes.com/sites/kellyphillipserb/2015/01/27/where-are-my-tax-forms-due-dates-for-forms-w-2-1099-1098-more/

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  2. Joseph Ignacio
    5 Feb at 10:48 pm

    Does investing in a motiff qualify as a contribution to a retirement account for tax purposes?