My main brokerage does the same for the big combined 1099-Div/Int/B/OID etc form for the stuff they manage.
Where it gets trickier is if you own a bunch of issues that each send out their own 1099s. So now you’re looking for a bunch of separate 1099s from different payers on different schedules. It’s easy to end up with a lot of loose ends that way.
I have had no real issues receiving any tax documents this year.
In my experience, when it comes to brokerage 1099s, you should be able to find somewhere on their website (if your broker doesn’t have a website, uh, I don’t know what to do) that will say when the 1099 is expected to come out. The absolute drop-dead date is mid-March, and there are some clients of ours who routinely get them nearly that late. My own personal 1099s arrive either in late January (for places that aren’t waiting on others to report), or mid-to-late February (for those that are). The only one in the latter category for me is Schwab, and they say February 17th.
I assume that for most people, you’re dealing with companies that are large enough to have some idea of what they’re doing and when they have to do it by, but there’s already one example in this thread where that’s not true. When it comes to 1099-NECs, I’ve prepared some as late as August for people who were clueless about it. For those 1099s, you really should know what you’ve been paid, and the 1099 copy you receive is more to inform you that it’s been reported to the IRS, because there are reasons why you would report a different amount of income (it’s assuming cash basis, you might be paying taxes accrual basis; you might have not received a payment included in it until the next year; there may be others). We even have a client that reports a different amount of interest expense than their 1098 because they initiate all their mortgage payments on 12/31, but they aren’t received until the next year.
I would also caution people to be aware of the possibility that there will have a 1099-SA available for them at their HSA provider’s website, and not think about that when preparing their taxes since it doesn’t directly affect them if the HSA withdrawals were all for medical expenses. But if you don’t claim the distributions as such on your tax return, the IRS may issue you a notice of deficiency and assess penalties, which might cause a large headache even if you manage to resolve it in your favor. That’s definitely happened to a client of ours, though there were other things wrong with their return based on incomplete information they provided.
This is where it’s helpful to have a good paid preparer whose job it is to keep all your old returns on file and check to see if there’s anything missing that was there last year. Maybe the people we deal with are just generally more forgetful than the people who do their own return on Turbo Tax, and maybe TT, if you use it year after year, has similar reminders, but it’s very common for us to need to go back to people and ask for things that might be missing. Most of the time they’re missing because they won’t be getting them, but not always.
TurboTax definitely lists from where you received W-2s, 1099s and so forth when preparing your return next year.
We use TaxSlayer for our IRS volunteer tax preparation, and it also imports everything from last year when starting this year’s return.
This year I decided to try FreeTaxUSA (not quite free, actually, but much cheaper than the bigger name programs). Even it was able to import last year’s return from HRBlock, and kept track of everywhere we had received forms from last year.
Don’t mean to hijack, but I do want to ask this question:
As a volunteer tax preparer who encourages our younger clients to use the ‘free’ online software, I am curious as to what exactly you were charged for, and how much?
Sorry to be a bit cryptic about it. The federal filing was indeed completely free (and included some rather complex stuff that most people charge for, like an HSA, an IRA deduction, and some self-employment income). You have to pay $14.99 to file your state return.
So, yes, there is some payment necessary if you’re doing a state return as well, but that 15 bucks is still much cheaper than most other programs that I’ve seen, which usually charge at least $20 for the federal return if it’s anything more complicated than W-2 and interest income, plus more on top of that for the state.
I also ran the numbers through HRBlock’s program as well, to be on the safe side, and the results were the same. I did find HRBlock’s interface a bit prettier, but FreeTaxUSA did the job and was less expensive.
Edited to add: FreeTaxUSA also does bug you throughout the process to upgrade to their “Premium” version, which gives you online chat support and unlimited amended returns. Even that is only $7.99, but most people probably don’t need it. Just hit “No Thanks.”
I might be continuing the hijack, but the IRS actually offers completely free guided tax preparation on their web site (but only if your AGI is $73,000 or less for some reason). A lot of people are still paying for commercial tax software even though they don’t need to, because they are unaware that this free option exists. Apparently the IRS is literally forbidden by law from advertising the fact that this option exists. So consider this my public service announcement about the IRS Free File service.
Of course that is only for your federal taxes, but your state may offer a similar free service. I know California does.
ETA:
Does FreeTaxUSA let you itemize your deductions for free? Since I made too much to use the IRS Free file I posted above, I’m thinking about using FreeTaxUSA for my federal return, and the free California filing for my state return (Which I don’t think has an income limit). But I would like to be able to itemize my deductions, since I have mortgage interest to deduct and that usually comes out better than the standard deduction.
We don’t itemize, but according to their website, yes. Their selling point seems to be that no matter what the circumstances, your federal return is always free to prepare and file.
The only thing FreeTaxUSA really charges for is state returns. I think they have a nag screen at the very beginning for some added feature but as soon as you dismiss it then never bug you again. So I pay $0. I recommend them highly.
@WildaBeast they certainly itemize, and have lots of deductions both standard and rare. Schedule C for certain. If I had to guess that they’re missing anything, it’s probably some stuff related to foreign tax or non-resident filers.
But if you do use one of the IRS options make sure you go through irs.gov and not directly to the group. Some are known to put you on the “pay portal.” FreeTaxUSA is not one of these. I always go straight to their website.
Thanks for the replies, everyone. Good information.
As a further hijack, my state (Kansas) offers a free tax filing service on the State website. It works fine, but the downside is that if you have used one of the free sites for federal, then you will have to enter everything again on the state site. Depends on if you think your time is worth 20 bucks, or whatever the ‘free’ site is charging for the state return.
So I did my taxes today, using FreeTaxUSA. One minor annoyance is that it makes you do your state taxes before it will let you file your federal taxes. But you can remove the state taxes from your order if you don’t want to pay the $14.99 to have them file it.
Then I went to California’s website to file my state return. I got part way through, and found out I can’t use it because I made contributions to a HSA. The federal government doesn’t tax HSA contributions, but California does, and their software apparently can’t handle the adjustment. Since I’d already prepared my state return in FreeTaxUSA anyway, at that point I just said “screw it” and paid the $14.99.