Tax season can be an overwhelming phase of the year fraught with keeping track of documents, evaluating decisions, reviewing details, and updating financial matters. For some, that may be the same one or two documents that they have gathered for years, but for others, there is a multitude of forms and documents needed. Either way, it is important to evaluate the specifics as you work your way through tax season.
Leighton Investment Services believes taxes are an important piece of your financial plan – because it ultimately decides what of your income and investment growth you truly keep. While there are actions you can take to help your prior-year tax situation after the year has ended, many decisions you made in 2024 are finalized after we flip to the new year, and you are simply putting it all together to see where you ended up. However, there is much to be learned from those details that can help in future years!
As you work your way through tax filing and documents, remember to be mindful of what implications are drawn from that. Ask questions of your accountant and financial advisor if you don’t understand something or if you want to learn more.
In an effort to help clarify and educate you on some of the common forms that many people receive, we’ve outlined some definitions and details of specific forms below. LIS welcomes the chance to speak with you further on topics related to these documents:
What is a 1099 Form?
The IRS 1099 Forms are a group of tax forms that document payments made by an individual or a business that typically isn’t your employer. These can include payments to independent contractors, gambling winnings, rents, royalties, and more. Depending on the type of payment, different 1099 forms can and will be used. Note that if you receive a 1099 form, it’s your responsibility to report the income earned on your tax return.
Who receives a 1099 Form and why?
Some common examples of 1099 Forms you might receive include:
1099-INT – sent to taxpayers who earned more than $10 of interest in the tax year. Banks, brokerage firms, and other investment firms typically send these out for interest earned during the year
1099-R – issued when a taxpayer receives a distribution or payout from a pension, retirement plan, or individual retirement account (IRA). Certain annuities and life insurance contracts may also issue 1099-Rs. Note that not all retirement distributions are taxable, however. Consult a tax professional if you’re unsure whether you should pay taxes on a distribution.
1099-DIV – typically sent to a taxpayer if dividend or capital gain income was earned during the tax year. These dividends and/or distributions typically come from various investment instruments and are owed regardless of whether any money was received – ie, reinvesting the dividend or distribution does not waive or reduce the taxes owed.
1099-SA – Social Security Benefit Statement Reports the amount of benefits paid and repaid. Also shows Medicare premiums, federal income taxes, and other amounts withheld from your benefits.
1099-MISC – if you earned $600 or more in rent or royalty payments
Form 1099-G – if you received a state or local tax refund during the previous year.
When are 1099s issued?
There are different due dates for different types of 1099 forms. For example, Form 1099-INT is due by January 31st whereas 1099-DIV forms are not due until as late as March 15 for brokerage companies. It should also be noted that it is common for a 30-day extension to be filed and is possible that not all data is finalized until April. While companies aim to have these filed in a timely manner, the most important part of the process is that all is done accurately!
What other investment tax forms might I receive?
Schedule K-1 is an additional tax form that reports the amounts passed to each party with an interest in an entity, like a business partnership or an S corporation. The parties use the information on the K-1 to prepare their separate tax returns. It shows each partner’s share of the income and losses, reports their share of the tax deductions, and indicates each portion of various tax credits from the 1065 tax form of the entity. Some trusts and estates also use K-1s to pass income through to the beneficiaries to report on their tax returns.
While LIS is not in the business of giving tax advice, we recognize the value taxes play in your financial planning future. If you’re not happy with how your 1099s or tax filing finished and what was owed, reach out to us via phone or text at 641-628-1021 or email info@leightonis.com. We want to help you keep more of what you earn and evaluate what tax strategies might be right for your financial plan.