Keep good records for mutual funds


Brokers are required to report your cost basis to the IRS. Without good recordkeeping, you may not be able to prove you were overtaxed because of incorrect basis reporting by your broker. You can avoid problems caused by errors in reporting by keeping detailed records of every transaction. Work with your broker to ensure your records match with the information he or she is reporting to the IRS.

A common delay when we are preparing client’s tax returns are stock sales for which there is no cost basis shown on the brokerage statement. This not only causes a delay in the preparation of your return, but causes additional billable time spent contacting you in an effort to obtain this information. It also provides an opportunity for the lack of basis getting missed on your return and you then paying tax on the proceeds instead of the gain or loss.

Before you hand your information over to your CPA, look at your brokerage statement and identify those sales transactions which do not show a cost basis. We will sincerely appreciate not have to track you down to obtain it and your return preparation will go more smoothly.


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