1099B Equals Messy Tax Season Ahead
The first phase with the rules will require custodians, broker-dealers while others to report the cost basis for any equities purchased on or after Jan. 1, 2011 relating to the new 1099-B form to the IRS and clients. That means that in mid-February, millions of investors will receive an unfamiliar version of a vital tax document which some of our Miami Accounting Service will have to explain in detail.
It's fair to speak about everyone who receives some sort of 1099 opens it and pays focus on it,said Gustavo Viera CPA, director of his own Miami Accounting Service. This document is looked at, Viera added, noting that our Miami Accounting Service is girding for a really messy tax season.
The brand new 1099-B form will now include particulars on cost basis, holding period of time, whether a lot is covered or not, acquisition date and disallowed losses from a wash sale.
Under this legislation, the default method for brokers to calculate cost basis is first-in, first-out. Clients or their Palmetto Bay Accounting Service can designate another method (last-in, first-out, lowest price to highest, etc.) either as a default or for certain lots, but once a trade settles, the method can not be changed. That method lock-in will have implications for how advisors engineer tax-sensitive investment strategies.
The result of the new forms, CPA Viera predicts, will be widespread confusion among investors, who should be expected to turn to their Miami Accounting Services in droves for an explanation.
The CPA is going to be nine times out of 10 the main point of contact, Viera claimed. Even if it's not necessarily the CPA's issue, they're visiting turn to their CPA primary.
At our Miami Accounting Service is going to send out around tax newsletter the new 1099 forms by January, Viera said the firm is expecting to receive hundreds of message or calls as tax season leg techinques into high gear There's no question they're the main [tax] changes in my own history at our Miami Accounting Service, said Viera, who has been a CPA for a lot more than 25 years.
Viera is recommending which Miami Accounting Services develop a communications and outreach strategy early, not only in their own dealings with clients, but also with CPAs, as well being a training program for the staffers who will be fielding the phones.
CPA's who provide their own clients with realized gain/loss information ought to take the very vital step of synchronizing and reconciling their calculations with their brokers to ensure that clients receive consistent information.
At the same period, Viera also counsels Miami Accounting Services to look ahead to the next two phases in the law and adjust their own bookkeeping and communications plans accordingly. For the 2012 tax year, brokers will be asked to report cost-basis data with regard to mutual funds, dividend reinvestment plans and most exchange-traded funds acquired on or after Jan. Even for CPA firms that have already reached out on their clients, though, Viera is suggesting that it would be worthwhile to issue some sort of reminder ahead of this mid-February deadline for subscriber 1099 forms. Miami Accounting