A Reason Why You Might Want to Delay Filing Your 2014 Return

I thought I would share an email I received from a Stock Broker that I share several clients with.  This relates to the frustrating, now common practice of receiving 1099 Bs later than usual and why you can almost expect that they will also be corrected.

“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…

During the fall of 2008, Congress passed the “Emergency Economic Stabilization Act of 2008” (ESSA). This legislation recognized the trend where more and more brokerage firms were issuing 1099 forms in February, and extended the traditional mailing deadline for Consolidated Forms 1099 from January 31 to February 15. Additionally, we have used an IRS-approved extension to mail 1099 forms to clients in February during the past few years. This approach was utilized because of the increasing complexity of tax reporting and successfully reduced amendment 1099’s rates from around 23% to about 7-8% annually.  While this reduction in the issuance of amended 1099’s is significant, it has not eliminated them.
It is still highly likely you will receive one or more amended 1099 in 2015 for tax year 2014. Amended 1099 forms will be sent as revised information is received from issuers.  Since many distributions on Form 1099-DIV are reclassified after year end, we strongly suggest you wait as long as possible before preparing their return.  Bear in mind that tax forms issued by us (and every other firm) contain information available at that time, and may be corrected at a later date, generating one or more amended forms – simply put, multiple amendments are normal.
This situation, created by the complexity of the tax code, causes everyone anxiety.  While I cannot change the situation, I hope having a clearer understanding helps.”

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.


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