As we near the end of the year, it’s a good time for a reminder for people who have investments: don’t forget to look for your brokerage 1099s online at tax time.
Every year it happens at least twice — a client fails to give me a 1099 from a brokerage. And 12 months later, the IRS spits out a computer-generated letter assessing additional taxes against the client for the interest, dividends or capital gains reported on the 1099 that didn’t make it onto the tax return.
Sometimes the client didn’t know they even had investments that would trigger a 1099 being issued (that happened one time with stock options — the client assumed there wouldn’t be a 1099 because the options ran through payroll and resulted in taxable income on their W-2, so the client wasn’t even looking for a 1099).
Sometimes the client has multiple investment accounts and forgets that they didn’t get a 1099 mailed to them from one brokerage. I try to keep track of these things and remind people, but people frequently open and close accounts, so it can be hard to keep up with.
More and more brokerages are making 1099s available ONLY online, meaning the client has to think to go out and retrieve the 1099s.
So this time of year is a good time to make a note to verify what brokerage or investment accounts you have, find your login, and make a note to log in at tax time to check for 1099s.