“Tax reporting has become very onerous over the last 15 years. Specifically, starting in 2003, with the change in the taxation of dividends by criteria. If an issuer (individual company, mutual fund, ETF, municipality, etc.) changes the recognition, we must amend and resend the 1099 reflecting the new information. While we do produce the 1099’s, we do not control the underlying information. For example, if one company changes the characterization of income from a subsidiary it owns, it more than likely will force us to reissue the 1099. In the case of a taxpayer who has already filed their return, they would be forced to amend their tax return. Amending a tax return (possibly more than once) is much worse than waiting a little longer to file the return. With that said, I think a little background may be helpful…
I share this so that those of you who receive 1099s for your investment accounts will consider stalling your filing to ensure that you do not have to then amend your return because you subsequently get a corrected 1099.
It is frustrating. We CPAs basically lose a month of tax season. We cannot finalize any returns in February for those people who have taxable investment accounts. That is 40% of the 2.5 month long tax season! So we are feeling it too and frustrated right there with you.
There is no penalty for extending, there is no downside to extending. Every CPA firm needs clients that choose to extend because it is simply impossible to get every single return done and out the door in 2.5 months. So consider extending and reduce your stress and that of your CPA’s. Caveat: if you are extending, keep in mind that you do not get an extension to pay your taxes. If you have any reason to think you will owe taxes, then at least get with your CPA to determine how much money you should send in with your extension.