SAY IT ISN’ T SO
( Yes, It’ s Tax Time Again)
By: Katy L. Chase, CFP ®
It’ s that time of year when your mailbox is suddenly bursting with official tax documents from your employer, the Social Security Administration, investment companies, and debt holders.
The early part of each year can be overwhelming trying to organize, sort, and properly record income, interest, capital gains and losses, dividends, charitable giving, and deductions.
Let’ s break down the most common tax documents that individuals receive to get a better handle on what each represents. The lists are separated under two titles: actionable and informational.
Actionable tax documents refer to the information that is provided by specific companies for the information to be actively included in the tax return. Most likely the taxpayer needs to receive the information from the tax document provider prior to filing( i. e. total taxable and non-taxable earnings from an employer).
Informational tax documents refer to the information that the taxpayer might already know, but that needs to be kept in the taxpayer’ s records( i. e. health care coverage).
Actionable Forms( not an inclusive list, but most popular) W-2- reflects earnings from a company( non-contract work) 1099-B- documents capital gains or losses on investments
1099-DIV- documents dividend income( think stock holdings that pay dividends)
1099-INT- documents interest income( think interest from bank accounts or CDs)
1099-MISC- reflects income other than employee income( think independent contract earnings)
1099-R – use if a distribution from a pension, annuity, retirement or profit-sharing plan was taken
1099-S – needed if proceeds were made from a real estate transaction
SSA-1099 – required for anyone who receives benefits from the Social Security Administration
1099-G – required for anyone who receives government unemployment compensation or state / local income tax refunds
Form 1098 – needed if a mortgage is held as it shows how much interest, points, and primary mortgage insurance has been paid
1098-E- reflects paid student loan interest
1098-T- for those who paid tuition and other qualified education expenses at an eligible education institution
K-1 – used if income was from an estate, trust, partnership, or S Corporation
Informational 5498 – documents the contributions made to an IRA or Roth IRA
1095-A – used by those who were covered by a health insurance provider participating in the health care exchanges
1095-B – used by those who work at a company with less than 50 employees that offers health care coverage, as well as health care insurance providers, proving an individual had the minimum essential coverage
1095-C – used by those who work at a company with more than 50 employees that offers health care coverage, proving an individual had the minimum essential coverage
Please be sure to talk with your tax advisor regarding the content above as everyone’ s situation is different.
Katy Chase is a financial advisor at Lighthouse Wealth Management. She and her husband, Tom, recently moved into the Lake Linganore community. She can be reached at KATY @ LIGHTHOUSEWLTH. COM with questions.
Securities offered through First Allied Securities, Inc. Member FINRA / SIPC. Advisory services offered through Lighthouse Wealth Management, a registered investment advisor not affiliated with First Allied Securities Inc.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
LakeTalk February 2017 27