Tax center

2023 Tax Year Guidance

 

Timing

If you plan on filing by this year’s April 15, 2024 deadline, we recommend waiting until mid to late February or early March to provide your tax preparer with your tax reports. As investment companies sometimes amend the original Form 1099 reporting of income, filing later helps ensure that you have the most up-to-date forms. Please touch base with your tax preparer to understand their timing preferences as well.

 

Security

The IRS and other tax groups continue to urge taxpayers who want proactive protection against identity theft when filing their Form 1040s to opt into the IP PIN program. An IP PIN is a six-digit number assigned to eligible taxpayers to help prevent cybercriminals from filing a fraudulent income tax return using your personal information. If the IRS believes you to be a victim of identity theft, it will assign you an IP PIN each year.  You can learn about IP PINs here.

 

2023 IRA and Qualified Retirement Plan Distributions

IRA and qualified plan custodians should issue Form 1099-R to recipients by January 31, 2024 to report distributions and income taxes withheld from 2023 IRA and qualified retirement plan distributions.

 

2023 IRA Nondeductible Contributions

If a 2023 nondeductible contribution was made to an IRA, Form 8606, Nondeductible IRAs should be filed with your Form 1040. Filing this form will report to the IRS the tax basis amount in your IRA so that the nontaxability of future IRA distributions can be substantiated. Keeping track of the tax basis in an IRA is the responsibility of the taxpayer, not the IRS or IRA custodian. It is the taxpayer’s responsibility to inform their CPA or tax preparer if a nondeductible contribution was made during the tax year.

 

Qualified Charitable Distributions (QCDs)

Note that Form 1099-R received from the IRA custodian does not disclose the amount of 2023 QCDs from the IRA. We recommend that you share a list of your 2023 QCDs with your tax preparer in order that they are properly reflected in your tax returns.

If you directed your IRA to make a QCD in 2023, we will provide you with documentation reflecting distributions that we assisted in processing with you and the custodian.

If you issued checks from your IRA for QCDs, we recommend reviewing the check register and providing your tax preparer with these details.

Form 5500

Note that if you are the plan sponsor for an individual (or solo) 401(k) plan that contained over $250,000 in assets as of the last day of the plan year, you are required to file a Form 5500 with the IRS. The filing date is July 31 for plans with a year end of December 31. We recommend that you speak with your tax preparer to confirm this form is being filed in a timely manner.

 

Taxable Account Reporting

Municipal bond fund interest

National municipal bond funds held in your taxable account(s) include bonds issued by many U.S. states. We have included the links below for the municipal bond funds most commonly held in our managed portfolios to assist you and your tax preparer in determining the portion of the interest from the fund(s) that may or may not be subject to state taxes.

 

Alternative Investments

If you own an alternative investment, you may receive a Schedule K-1 that reports your share of an entity’s taxable income, deductions, credits, etc. Given the nature of these investments, Schedule K-1s are generally issued later in the year and may necessitate you filing an extension.

 

Transferred/Closed Accounts

Note that if you closed a brokerage account during 2023, a Form 1099 will still be generated for the closed account. Please check with the custodian of the closed account or your Modera team if you do not receive the document.

In addition, if you transferred an account from one brokerage firm to another during 2023, you will likely receive two Form 1099s, one from the former firm and one from the current firm.

 

Please do not hesitate to reach out to your wealth manager if you have any questions.