Prepare Now for Tax Season
The initial tax filing season for 2023 is approaching and we want to provide some reminders to help you prepare.
Your custodian (Fidelity, TD Ameritrade, Schwab) provides the basic tax reporting for your accounts.
TAXABLE ACCOUNTS – FORM 1099
For a taxable account, you will receive a consolidated 1099 form, which reports interest (1099-INT), dividends (1099-DIV), realized capital gains and losses (1099-B) and any miscellaneous income (1099-MISC) all in one report.
If applicable, Forms 1099 will also include other expenses paid out of your taxable accounts such as custodian fees, margin interest, and foreign taxes which may also be deductible. Investment advisory fees paid to ACM will also be reported on your 1099 form.
You should provide the consolidated 1099 form for any taxable accounts (individual, joint, trust) to your tax preparer/CPA, if you are using one. If you don’t want to wait for your 1099 to come in the mail, you can log in to your account through your custodian’s website and access your 1099 online and download it at your convenience.
Click the following to log in to Fidelity, TD Ameritrade, Schwab.
As of this commentary, your custodian may have only a “preliminary 1099” available online, which means that they have accumulated most, but perhaps not all the information needed at this time to complete your tax return. The deadline for furnishing most 1099 statements to recipients is February 15, 2024.
Public companies sometimes re-characterize income after year-end, which may result in your custodian having to issue one or more corrected 1099 forms before a final 1099 form is complete. For this reason, if you plan on filing by this year’s April 18 deadline, your tax preparer may recommend that you wait until late March to ensure that you have the complete data.
IRAs AND RETIREMENT ACCOUNTS – FORM 1099-R AND 5498
Distributions from IRAs and other retirement accounts typically constitute ordinary income and are reported on Form 1099-R for tax purposes, which you should also provide to your tax preparer and which can be similarly accessed online, when available, by logging into your account.
Form 5498 is an information statement tracking IRA contributions that is not required to be filed with your tax return. Because taxpayers have until April 18 to make contributions to IRAs for the prior tax year, form 5498 is sometimes not posted until May, which means you may have finished your taxes before you receive this form.
FORM 1065 – SCHEDULE K-1
Investors in certain ACM investment strategies may have owned securities issued by publicly traded limited partnerships or limited liability companies. Each investor’s share of the partnership’s income, deductions and credits, are reported on Schedule K-1 (Form 1065), which is issued by each respective limited partnership/limited liability company and reported separately from Form 1099.
Individual K-1s are typically distributed by the security issuer in March and can be found through the Investor Relations section of the issuer website or via www.taxpackagesupport.com.
We hope that you find the above information useful in the preparation of your 2023 tax returns and, if you have questions, please reach out to your ACM Wealth Advisor.
Advisors Capital Management, LLC is an investment advisor registered with the United States Securities and Exchange Commission. Registration does not imply any degree of skill or training. All investing carries risk, including the potential for the loss of principal and past performance is no guarantee of future results. This content is for informational purposes only, can change at any time without notice, and is not investment advice or a recommendation to trade any security. Indices are not available for direct investment. We only provide services in jurisdictions where we are registered. Our disclosure brochure (ADV Part 2A) and customer relationship summary (ADV Part 3) are available at https://adviserinfo.sec.gov and upon request.
