Client Question: 1099s

February 15, 2024

I’ve been hearing from a few clients this week asking when they will receive their 1099s from Schwab (the custodian we work with at Windermere). With tax season in full swing, I thought these reminders may be helpful for a wider audience

What is a 1099?

A 1099 is a tax form that reports non-employment income to the IRS. Since non-employment income can take many forms (rent, independent contractor earnings, dividends, interest, capital gains, IRA distributions, etc), there are quite a few 1099 forms.

Will I receive 1099s?

The answer, as is usually the case, is that it depends. If you had non-employment income over certain thresholds, you will be sent a 1099. The threshold varies by income type. For instance, independent contractors will be sent one if they made over $600 from any one customer. Investors get a 1099 for any level of investment-related income.

Does the IRS get copies of 1099s?

They sure do. And based on some experiences clients/friends have had, they seemingly use software to match your reported earnings against 1099 totals. So it’s essential you collect all your 1099s and report income appropriately on your tax return (as well as ensure that any 1099s sent to you with improper totals are corrected).

When will I get my 1099s?

The deadline for issuers to send 1099 varies by format. Many (including 1099-NEC for contractor payments and 1099-R used for IRA distributions) need to be sent by January 31 so you should already have those on hand. However, some (like the 1099 Composite that broker dealers issue to cover dividends, interest and capital gains) are due at the end of February. Many broker dealers (Schwab included) publish detailed timelines on their websites for when these forms will be sent and nowadays, they even provide customized dashboards with receipt dates specific to your accounts, their structure, and related activity. In short, please consult your custodian’s website for detailed timing on your specific 1099s.

Why do I get revisions?

1099s publish data provided by other entities – in the case of a 1099- Composite, broker dealers are compiling data from every stock, mutual fund, ETFs, bond, etc. If that underlying security issuer makes an error in their reporting and corrects it, all impacted 1099s will be amended. In many cases, the differences are small but it’s always wise to compare totals in any revised 1099 and work with your tax advisor on whether you need to amend (if you have already filed your return).

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