The 2022 tax season is about to get underway as the IRS recently announced they will begin accepting and processing returns on January 24 (https://bit.ly/3nnaDhM). We’ve been through this process a time or two and have shared our answers below to the most common tax-reporting questions we receive from clients this time of year.
WHEN SHOULD I EXPECT MY 2021 INVESTMENT-RELATED TAX FORMS?
Taxable Accounts - You can expect to receive a Consolidated Form 1099 from your account custodian (Schwab, Pershing) in mid to late February. This form is produced for each of your taxable investment accounts and reports the income earned in the account during the year (interest, dividends, and sales proceeds).
If you have not received your Consolidated Form 1099 in the mail or electronically by early March, please let us know and we will help track it down for you.
Retirement Accounts - If you made a distribution in 2021 out of any retirement account (401k, 403b, IRA, etc.), you can expect to receive a 1099-R from the account custodian reporting the amount distributed.
The deadline for custodians to send these forms out is January 31st, so you can expect to receive them by early February.
Private Placements - If you have invested in private placements, you should receive one or more additional investment-related tax documents that you will need to report on your return.
If any of your private placement investments are in a partnership, you will receive a Schedule K-1 and can usually expect it from the partnership by the end of March.
WHAT ELSE SHOULD I KEEP IN MIND FOR FILING MY TAX RETURN THIS YEAR?
Qualified Charitable Distribution (QCD) – A QCD is a charitable gift made directly from your IRA that does not have to be reported as taxable income on your return. The full IRA distribution still gets reported on the tax form (1099-R) and it is your responsibility to remove the QCD amount from the taxable portion on the return.
Tax-Favored Account Contributions (IRA, Roth IRA, HSA) – If you already contributed to one of these accounts for 2021, please make sure it is reported on your return. The contribution deadline is April 18, 2022, so you still have time to fund these accounts for the 2021 tax year.
Charitable Contributions – Even if you no longer itemize deductions, it is still worth tracking and reporting your donations to charity as each taxpayer is eligible to deduct up to $300 ($600 for couples) of charitable contributions each year.
Advance Child Tax Credit Payments – If you received advance child tax credit payments during 2021, you will need to reduce the amount claimed for the credit on your 2021 return. The IRS will send a notice (Letter 6419) with the total amount received to assist with the child tax credit calculation on your return.
Economic Impact Payments – If you did not receive a third economic impact payment, or did not receive the full amount, you may be eligible for a recovery rebate credit when you file your 2021 return. The IRS will send a notice (Letter 6475) with the total stimulus payments received in 2021 to assist with the recovery rebate credit calculation on your return.
We know that tax filing time can be stressful as you gather documents and records to file your tax return before the deadline. We hope this is helpful and alleviates some of the stress, but please let your planning team know if you have any further questions.