1099 Forms: Explaining these ubiquitous forms and their uses

If you are not already receiving 2019 tax forms, you may receive some soon. 1099 forms are sent out by banks and brokerages in January. Sometimes 1099s are restated, and you may receive an updated version in February.

How do I get 1099s from Kaizen? Our clients can access Schwab tax forms on Schwab’s 1099 Dashboard (log into your Schwab account). If your form is not yet available, Schwab’s 1099 Dashboard will let you know the expected availability.

What is a 1099 form? This is a record of payment from an individual or entity, showing a payment, generated for your records. The individual/entity sends a copy to both the payee as well as the I.R.S.¹

Who might be sending 1099s? Businesses send their freelancers 1099s. Banks send 1099s to reflect interest from a savings account. A state may send a 1099 for a tax refund. If the financial institution who handles your retirement account writes you a check, they will also send you a 1099.¹

There are many types of 1099 forms, and these are the types our clients most often receive:

1099-B: Proceeds from selling stocks, mutual funds, or ETFs.
1099-DIV: Dividends and certain distributions from mutual funds.
1099-G: Payments from government agencies and qualified state tuition programs, including state and local tax refunds, unemployment benefits, and gambling winnings.
1099-INT: Interest income of $10 or more.
1099-LTC: Distributions (payments) from long term care insurance contracts and some payments from life insurance.
1099-MISC: Miscellaneous income, including compensation received as an independent contractor.
1099-Q: Withdrawals from 529s and similar savings plans.
1099-R: Distributions from retirement, pension, and profit-sharing plans as well as any IRA or annuity contract.
1099-S: Gross proceeds from real estate transactions or exchanges.
1099-SA: Distributions from Health Savings Accounts (HSA), Archer Medical Savings Accounts (Archer MSA), or Medicare Advantage Medical Savings Accounts (MA MSA).¹

A CPA or other qualified tax professional will use these forms when preparing your 2019 tax return. Kaizen Advisors review client taxes to look for opportunities going forward, such as making an investment plan that considers taxes and using tax-advantaged accounts to save for retirement, health, and education. Clients nearing or in retirement can compare different withdrawal strategies to meet cash flow needs while reducing taxes. If you or someone you know would like to discuss tax planning, please don’t hesitate to reach out to a Kaizen advisor.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio.  Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Kaizen Financial Advisors, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.

Citations

1 - nerdwallet.com/blog/taxes/what-is-a-1099-form/ [8/22/18]