“The hardest thing in the world to understand is the income tax.” — Albert Einstein
I thought injecting a bit of humor into the topic of taxes might catch your interest. It’s the end of January and, of course, it’s time to start thinking about the 2021 tax filing season. We know it’s everyone’s least favorite financial planning topic. It’s complex, but it’s definitely not the most difficult thing in the world to understand. We strive to always view your financial plan holistically to maximize as many tax savings strategies as possible. Below are a few reminders for you to remember during tax time and throughout the year. We’ve also included some resources to help you get started this season, including a document checklist and a list of Raymond James’ 1099 mailing dates.
Before we jump right into business, I want to congratulate Sophia Whitney, our Client Services Representative, on the purchase of her new home in Olney. As a previous lifelong resident of Rockville, she’s always lived within a short 10-mile radius of her family. Even though Olney is a little farther, it’s a great fit and location to call her new home.
- Employer-sponsored benefits – Retirement plans, such as 401Ks allow you to contribute pretax earnings, reducing your yearly taxable income. Flexible spending accounts provide you the ability to use pretax dollars to pay for healthcare, childcare and other qualified expenses.
- Tax-loss harvesting strategies – Check with us to make sure all cost-basis information is complete and accurate before calculating losses and gains.
- Tax-efficient investing – If it aligns with your financial goals, including some tax-exempt investments, such as Municipal bonds (generally exempt from federal and state income tax), can help round out your portfolio.
Tax Document Checklist
It may seem like the holidays are just wrapping up, but tax documents will begin arriving in the next few days. Now is the time to schedule an appointment with your accountant and begin gathering the following documents:
- Year-end statements from financial accounts (see below for Raymond James mailing schedule)
- W-2s, 1098s and 1099s, K-1s (many can be found online)
- Last year’s tax returns
- Receipts for donations and business-related expenses
- Social Security numbers for your spouse and dependents
- Business identification number
- Tax ID number for daycares or schools, if filing for the child care credit
Raymond James’ Form 1099 Mailing Dates
Raymond James will mail Form 1099 tax statements in three main groups. As detailed below, the mailing date typically depends on the holdings in your account.
Group 1: Mailed by February 15
Forms mailed for accounts with holdings where issuers have finalized income reallocation or accounts holding less-complex securities, such as equities.
Group 2: Mailed by February 28
Forms mailed for accounts with holdings where issuers have finalized income reallocations since Group 1 was mailed (this typically includes Mutual Funds and Unit Investment Trusts (UITs)). Additionally, the first amended composite Form 1099s are mailed.
Group 3: Mailed by March 15*
Forms mailed for remaining original 1099s, including final Real Estate Mortgage Investment Conduit (REMICs), that report on Form 1099-OID. Additionally, the second amended forms are mailed as needed.
*All Forms 1099s must be mailed by March 15 regardless of any pending adjustments or income reallocation per IRS regulations. Amended mailings will occur as needed.
As a reminder, if a Form 1099 is delayed from the first mailing, it will be sent in either the February 28 or March 15 mailings, depending on when we receive all the necessary information from the securities issuers and determine the form is complete.
If you have any questions on when you can expect to receive your Form 1099, please do not hesitate to contact us directly.
Todd M. Wike, CFP®
CERTIFIED FINANCIAL PLANNER™
Managing Partner, Potomac Financial Group
2022 RJFS Chairman’s Council Member*
The information contained in this material does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Todd Wike and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. Raymond James is not affiliated with and does not endorse the services or opinions of the various podcasts or applications discussed in this material. Chairman’s Council Membership is based on prior fiscal year production. Re-qualification is required annually. The ranking may not be representative of any one client’s experience, is not an endorsement, and is not indicative of advisors future performance. No fee is paid in exchange for this award/rating. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®,CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.