These days, your taxes pretty well do themselves. Unless you’re a small-business owner with an overly complicated tax situation, TurboTax, H&R Block or any of the other online options will do the heavy lifting once you input the information from the relevant tax forms.
The hardest part is simply knowing what tax forms you need to wait for.
As a general rule, your bank or broker will send you everything you need. But certain forms are mailed out much later than others, so you need to know what’s coming your way lest you fire off your return early and have to amend it later when those last few forms come straggling in.
Today, I’ll break down some of the common forms that investors generally need. Depending on your situation, you may very well have a few forms that aren’t on this list.
If you file your taxes after reading this article and then realize in horror that you forgot a form or two, don’t panic. These things happen. You can simply file an amended return including the new tax forms, pay any additional taxes due, and be on your merry way.
The Standard 1099
If you own a brokerage account or an interest-bearing bank account, then you are probably all too familiar with the standard 1099 tax forms they send out around the beginning of February. Often sent as a “consolidated” 1099, this is actually a collection of multiple forms.
If you earned dividends during the tax year, you will receive a 1099-DIV, which details all dividend income. The 1099-DIV breaks down dividends received into “qualified” dividends taxed at a lower rate and “non-qualified” dividends which are taxed as ordinary income. It also breaks out foreign dividends and other less common distinctions.
Similarly, the 1099-INT breaks out interest income from bonds, CDs or interest-bearing money-market, savings or checking accounts. The 1099-INT also will break out non-taxable interest, such as from municipal bonds, foreign interest earned (and any foreign taxes paid on that interest).
The real meat comes with the 1099-B, which breaks out the proceeds of all stock, futures, commodities and options sales. The 1099-B will break out your proceeds by long-term capital gains and short-term capital gains. As a general rule, your broker will provide the cost basis, but if you have held the position for a long time, it is possible that they will leave the cost basis blank. If that is the case, you may need to dig deep into your records to find the cost basis … or call customer service to see if they can dig up that information for you.
Partnership K-1 Forms
If you are a partner in a limited partnership, you will need a K-1 form to complete your tax return. This would apply to most hedge funds and private placement investments, including real estate partnerships.
In days gone by, K-1s were mostly the domain of wealthy accredited investors, but the popularity of master limited partnerships over the past decade have made this far more of a middle-class problem. If you own a portfolio of several MLPs, you will receive a separate K-1 for each of them. Certain “exotic” ETFs in the commodity space will also issue a K-1.
This might be something of a bitter pill this tax season, as the MLP sector is sitting on some pretty substantial losses. And MLP K-1s tend to be particularly dense, full of obscure oil and gas line items that barely make sense in plain English.
Yet you should fear not. Many of the MLPs have downloadable K-1 tax files that you can upload to your tax software, making the process a lot smoother.
If you’re in a hurry to file your taxes … don’t be. K-1s are generally not mailed out until mid-March.
IRA Form 5498
Much of the appeal of investing via an Individual Retirement Account comes from the tax break you get in the year of the contribution. So, when filing your taxes, you certainly don’t want to forget any IRA contributions you made during the year.
From 5498 reports all contributions made during the tax year to a Traditional IRA (including an SEP IRA or a Simple IRA) or a Roth IRA. This is something that your IRA custodian will report directly to the IRS. The copy you get is for your records only, though you can use it when filling out your tax return.
There is one important point to note, however: The filing deadline for Form 5498 is May 31, a full six weeks after the April 18 tax filing deadline. So, don’t wait for this form to arrive before filing your taxes. Instead, look at your old brokerage statements or simply call your broker to get the correct contribution amount for year.
Note: You can make IRA and Roth IRA contributions for the previous year all the way up to the tax filing date. So, if you haven’t contributed to an IRA or Roth IRA for 2015 yet, it’s not too late. For 2015, the maximum contribution is $5,500 ($6,500 for those 50 or older).
Charles Sizemore is the principal of Sizemore Capital, a wealth management firm in Dallas, Texas.
