Tax season can feel overwhelming but knowing which forms to expect makes the process much more manageable. Here’s a quick guide to the most common tax forms you might receive for your investment accounts, depending on your account type and different account activity throughout the year.
Consolidated 1099
If you have investments, especially through a brokerage account, you might receive a Consolidated 1099 Statement. This all-in-one document includes:
• 1099-INT: Reports taxable interest earned.
• 1099-DIV: Summarizes dividends paid.
• 1099-B: Details the sale of investments, including cost basis and gains/losses.
• 1099-OID: Reports income from original issue discount bonds.
Form 1099-R
Form 1099-R is issued for distributions from pensions, annuities, retirement accounts (like IRAs, 401(k)s, or 403(b)s), or even insurance contracts. It reports the amount distributed, how much (if any) is taxable, and any federal tax withheld.
You’ll need this form if:
•You took a withdrawal from a retirement account.
•You rolled over funds from one retirement account to another (like a 401(k) to an IRA). This could be coded as a non-taxable transfer.
Form 8606
Form 8606 is used to report nondeductible contributions to traditional IRAs, distributions from Roth IRAs, or conversions from a traditional IRA to a Roth IRA.
You’ll need to file Form 8606 if:
•You made nondeductible contributions to a traditional IRA.
•You converted a traditional IRA to a Roth IRA.
•You took distributions from a traditional IRA, SEP IRA, or SIMPLE IRA where nondeductible contributions were previously made.
Form 5498
Form 5498 reports contributions to Individual Retirement Accounts (IRAs). This includes:
•Traditional and Roth IRA contributions.
•Rollover contributions.
•SEP and SIMPLE IRA contributions.
•Fair market value (FMV) of your IRA as of year-end.
You won’t typically need Form 5498 to file your taxes because the reporting is informational. However, it’s essential for verifying contributions or rollovers and confirming compliance with contribution limits. Financial institutions issue Form 5498 by May 31st, reflecting prior-year activity.
Fair Market Value Letter for Annuities
If you own an annuity, you’ll likely receive a Fair Market Value (FMV) letter from the issuing company. This document provides:
•The year-end value of the annuity.
•The required minimum distribution (RMD) amount, if applicable, for the upcoming year.
This letter is typically issued in January and is crucial for understanding your annuity’s current value and planning for RMDs if you’re of eligible age (generally 73 or older for 2024). While the FMV letter is not filed with your taxes, it’s an essential reference for ensuring accurate tax reporting of annuity distributions.
If you have any questions about which tax forms you might receive, don’t hesitate to reach out to a member of our team. We are happy to help!
