Time to Read: 8 Minutes
We’ve created a comprehensive list, in question format, to help you pull together your important tax documents before you begin the tax filing process. These questions are intended to help you gather all your key tax documents, expedite the filing process, and make sure your taxes are reported correctly.
1099s – Do I have all my tax documents for my non-retirement investments?
Strategy: You may have accounts that earned little income, you liquidated, moved to another financial institution, or transferred into your trust for certain estate planning reasons.
Tax Forms: In Spring, you should receive a tax form for any non-retirement account (typically unless it made less than $10 of income and had no losses during the year). For example, an account holding a single stock that paid no dividends, interest, or capital gains might not generate a 1099.
But if you decided to sell that stock for a loss, you should receive a 1099 reporting the details of that transaction. Don’t forget to collect tax documents for any accounts you may have closed, transferred, or retitled during the prior tax year.
1099Rs and Form 5498 – Will I receive tax documents for my retirement accounts?
Strategy: If you withdrew or contributed money to a retirement account, you would receive a tax document which should be given to your CPA.
Tax Forms: If you took money from your retirement account last year, you would receive a 1099-R in January for your distributions taken. This form should be given to your CPA.
If you added money to a retirement account, you would receive a Form 5498 for your contributions made. This form isn’t needed to file your taxes, but make sure to let your CPA know if you made contributions. If you don’t report your contributions, you might miss out on a tax deduction.
Backdoor Roth – Did I make a “backdoor” contribution to a Roth IRA?
Strategy: A backdoor Roth contribution is a way to add money to a tax-free Roth IRA even if your income is too high to make a direct contribution. To make a “backdoor” Roth contribution, you simply contribute cash to a Traditional IRA and then immediately transfer the money into a Roth IRA.
Tax Forms (quantity 3): If you made a “backdoor” Roth contribution you would receive three different tax forms. In January, you would receive a 1099-R for the money you moved from your Traditional IRA to your Roth IRA. This form should be given to your CPA.
Typically in May, you would receive two 5498s: (1) for the contribution to your Traditional IRA and (1) for the contribution to your Roth IRA. While the 5498s aren’t needed to prepare your taxes, you should keep them for your records and let your CPA know that you made a “backdoor” Roth contribution.
Roth Conversion – Did I convert Traditional retirement funds to Roth?
Strategy: A Roth Conversion is a way to move money from your tax-deferred Traditional IRA to your tax-free Roth IRA. You would pay taxes now, but eliminate unnecessary RMDs later, and build tax-free growth going forward.
Tax Forms (quantity 2): If you converted money from a Traditional IRA to a Roth IRA you would receive two tax forms. In January, you would receive a 1099-R from your Traditional IRA. This form reports the distribution from your Traditional IRA. Make sure to give your 1099-R to your CPA.
Typically in May, you would receive a 5498 from your Roth IRA. This form reports your Roth contributions to the IRS. In this case, your 5498 would show the amount you converted from your Traditional IRA to your Roth IRA. This form isn’t needed to file your taxes, but it’s a good idea to keep it for your records and let your CPA know you made a Roth conversion.
401(k) Rollover – Did I roll over a 401(k) to another retirement plan?
Strategy: If you change jobs, you can keep your old 401(k) where it is. But don’t forget you have the option to move it to your new employer’s 401(k) or your IRA. This is called a 401(k) rollover and the distribution is tax-free.
Tax Forms (either quantity 0 or 2): Depending on the method of transfer, you can either receive zero forms (if you did a direct “qualified transfer” from your 401k to your IRA directly at the custodian) or two if you did an indirect rollover where you received funds from your 401k and then deposited into your IRA.
In January, you would receive a 1099-R from your old 401(k)-plan custodian. This form reports distributions from your old 401(k). Make sure to give your 1099-R to your CPA.
Typically in May, you would receive a Form 5498 from your new retirement plan custodian. This form reports the contributions to your new 401(k) or IRA. This form isn’t needed to file your taxes, but it’s a good idea to keep it for your records. Make sure to let your CPA know you rolled over your old 401(k) to another retirement plan so you don’t pay taxes on the distribution!
Qualified Charitable Distribution – Did I give assets from my IRA to charity?
Strategy: If you are at least 70.5 years of age, you could gift assets in your Traditional IRA directly to charity. This is called a Qualified Charitable Distribution (QCD). The distribution is tax-free and counts towards your required minimum distribution. A QCD may also help reduce your Social Security taxes and lower Medicare premiums.
Tax Forms (1): If you gave assets from your IRA to charity, you would receive a 1099-R in January for gifts distributed from your IRA. While this form should be given to your CPA, it does not keep track of qualified charitable distributions. To avoid overpaying taxes, make sure to let your CPA know how much of your IRA distribution was considered a tax-free charitable gift.
Schedule K-1 – Do I own any alternative investments with a special type of tax form?
Strategy: You may own certain partnerships or other alternative investments that report earnings on a Schedule K-1 instead of a 1099. This form reports your share of partnership earnings, losses, deductions, and credits.
Tax Forms: While you would typically receive K-1s in March, sometimes they may not be available until after the April 15th tax filing deadline. Your CPA cannot file your tax return without your K-1s. Make sure to let your CPA know to file for an extension if you expect to receive your K-1s late.
Charitable Contributions: Did I track my donations?
Strategy: If you itemize your deductions, you may receive a tax deduction for your charitable giving.
Tax Forms (None): You likely won’t receive tax forms for your charitable gifts. If you made donations of less than $250, hold onto your receipts. If you contributed $250 or more, the charitable organization you supported would likely send you a confirmation letter. To receive a tax deduction for your charitable giving, make sure to track your contributions and send proof to your CPA.
Health Savings Account – Did I contribute to an HSA?
Strategy: Contributing to a Health Savings Account (HSA) is a way for high earners to get a tax deduction now and take tax-free distributions to pay for qualified medical expenses in retirement.
Tax Forms: If you added money to an HSA last year, you would receive Form 5498-SA in May for your contributions. This form isn’t needed to file your taxes, but make sure to let your CPA know if you contributed to your HSA. If you don’t report your contributions, you might miss out on a tax deduction.
Itemized Deductions – Can I deduct my advisory fees?
Strategy: While the Tax Cuts and Jobs Act eliminated the Federal deduction for advisory fees, some states like California may still allow residents to deduct investment management and tax preparation fees on their state tax returns. Also, the IRS allows your Roth IRA fees to be paid directly from your taxable account. This is an easy way to let more tax-free money accumulate in your Roth IRA.
Tax Forms: In most instances, advisory fees would be reported on your 1099s received in January for taxable accounts. If your CPA wants to know the advisory fees for your IRA accounts in which 1099s are generally not produced, let BWM know, and we’ll send an easy-to-read fee report.
Municipal Bonds – Are municipal bonds subject to tax?
Strategy: Investing in municipal bonds is a way to earn tax-free interest income. Generally, you would not pay federal taxes on interest income from municipal bonds. You would also be exempt from state taxes if you buy a municipal bond issued by your resident state.
Tax Forms: If your investments paid interest, you would receive a 1099-INT in February. Even though your municipal bond income may not be taxed, the IRS still requires you to report it. Remember to send a copy of your 1099-INT to your CPA.
Your tax forms are just one piece of putting together a financial plan with the potential to achieve your goals. Getting the right people together and then enacting tax-saving strategies in your investment planning are important, too.
Am I getting good advice?
As part of our service, BWM works together with our clients’ other advisors (CPAs, estate planners, bankers, insurance agents). If you do not have a team of advisors who you like and trust, please contact us and we will be happy to provide referrals to other professionals who work closely with our.
Am I planning ahead?
We can work directly with your CPA to uncover potential tax-saving opportunities in future years and put those tax reduction strategies into action.
While we do have a CPA on our roster, BWM and its advisors are not tax professionals. This checklist is intended to help ease the tax filing process for our clients. BWM recommends consulting with a tax advisor before acting on any decisions with tax implications.
Note that mailing schedules for various tax forms can sometimes vary by custodian. Please refer to complete mailing guidelines below for each custodian specific (or reach out to alternative custodians if assets not held with BWM).