Why Do I Have to Wait So Long For Tax Information from my Investment Accounts?

Why Do I Have to Wait So Long For Tax Information from my Investment Accounts?

It’s February now, and that means that we’re in the thick of tax season. Around this time, we start hearing this question from our clients: “When will I get my 1099 from my investment account?” A common question we get is, “When will I get my 1099 from my brokerage account?” The common misconception is that they are due on January 31st. The confusion most likely comes from the fact that W2 forms and 1099-MISC forms with non-employee compensation are supposed to be mailed by January 31st each year. Let’s take a look at the actual deadlines, and some of the common causes for delay or correction.

When one thinks of a 1099 from their brokerage account, they are most often referring to 1099-Int for interest, 1099-Div for dividends, and 1099-B which shows the details from securities transactions. What often happens is that a brokerage account contains all three types of transaction with dividends, interest, and stock sales, so the brokerage company will issue a consolidated 1099 statement with all the different types of earnings in one. These 1099 forms don’t actually have to be sent until February 15th.

So what about those pesky corrected 1099 forms? Is your brokerage firm making a lot of mistakes? The answer is most likely not. Think about how many companies, mutual funds, bonds, and ETFs the average person holds in their portfolio. Now think about the millions of securities available worldwide. The numbers are staggering. Each company must report their information to your brokerage firm, which must then consolidate all of the information and report it to the account owner. Invariably, adjustments must be made. For example, a company may reclassify the taxable classification of a distribution they made, or they may reclassify certain dividends as either qualified or non-qualified. It’s also common to see gains corrected from long-term to short-term and vice-versa. It’s complicated! Sometimes, it just takes a little more time.

So when should you expect to receive your tax forms this year? Here’s a list of expected correction cycles release by TD Ameritrade:

1st Correction Cycle – February 22, 2017
Reports reclassified income (not captured on Consolidated 1099 forms to be issued in mid-February 2017) that was reported to TD Ameritrade between 2/9/2016, and 2/14/2016.

2nd Correction Cycle – March 8, 2017
Reports reclassified income that was reported to TD Ameritrade between 2/15/2016, and 2/28/2016.

3rd Correction Cycle – March 22, 2017
Reports reclassified income that was reported to TD Ameritrade between 3/1/2016, and 3/14/2016.

4th Correction Cycle – April 11, 2017
Reports reclassified income that was reported to TD Ameritrade between 3/15/2016, and 4/4/2016.

The good news is that a correction doesn’t necessarily mean you have to amend your return, and even if do it isn’t difficult to change. Our suggestion is to be patient in filing your return if there’s a high likelihood that you’ll received corrected tax forms from your investment accounts. It’s better to have the correct information the first time than to have to make a correction later.