Tax-Filing Myth Buster: 1099 Deadlines for Brokerage Accounts

Tax filing—fact or myth? Your brokerage account’s 1099 form for 2023 must be in the mail by January 31, 2024.

Myth.

Say what? That’s right, a consolidated 1099 form should be postmarked by February 15, 2024, according to the Internal Revenue Service (IRS) unless firms file for an extension. Firms that file for a Client Tax Form extension will have until March 15, 2024, to postmark the consolidated 1099 form. Actually, that’s been the case for a while now—the 1099 mailing deadline changed starting with the 2008 tax year.

Previously, firms were required to have these forms validated and postmarked by January 31. But that’s no longer true. With the complexity involved in producing consolidated 1099s, the extended deadline gives brokerage firms more time to validate and avoid corrections—something that’s required when funds reallocate their distributions or when securities are purchased in January during an open wash sale window (oh, those pesky wash sale rules).

TD Ameritrade uses a phased approach to get forms out quickly while minimizing the number of corrections. If your portfolio includes certain types of securities like mutual funds and real estate investment trusts (REITs), which may reallocate or reclassify their distributions in January and February, your form may be issued in a later phase to attempt to avoid corrections. 

Note: The deadline extension applies only to consolidated 1099s that include a 1099-B, which is a form that summarizes the proceeds (gains and losses) of stock transactions. Standalone 1099s are still held to the old 1099 deadline of January 31.

What’s in the Consolidated 1099 Form?

Your consolidated 1099 will contain all reportable income and transactions for the year. Depending on your account activity, yours may include any or all of the following:

Why the wait?

Can there be benefits to waiting another two weeks? Absolutely—a lot can happen in two weeks. For example:

• The additional time for form validation is helpful for tax form providers (that’s your broker).
• Fewer 1099 forms have to be corrected due to a fund having reallocated distributions.
• The extension allows for tracking the purchase of a security in January during an open wash sale window, which changes the transaction reported for the tax year that just concluded.

But don’t assume if you get one corrected form, you’re in the clear. More corrections could come. Firms are required to produce corrected forms in a timely manner, so if the funds in which you invest reallocate in September (and yes, while it’s rare, it does happen), you’ll receive a corrected tax form.

Every effort is made to send tax forms out earlier for accounts that have little chance of a correction. For instance, perhaps an investor didn’t have any trades in December that would be impacted by trading activity the following January, or the securities don’t typically reallocate distributions. Still, there’s no guarantee a corrected form won’t be issued.

Take a Deep Breath

Suppose it’s February 4 and your broker indicated your tax form will be mailed out by the 16th. Rest assured, this is within the IRS 1099 deadline; the firm didn’t get an extension just to make you wait. After all, brokerages don’t like issuing corrections any more than you like receiving them.

Let Us Help

Once you’re logged in to tdameritrade.com, go to My Account > Tax Center. Check out the Tax Document Calendar for 1099 due dates and other information on forms TD Ameritrade generates.

You can also Ask Ted®. You’ll find him under the Support button along the top navigation bar. If he doesn’t know the answer to your tax question, head to the Contact Us page under the Client Services tab to see all available choices.  

TD Ameritrade does not provide tax advice. We suggest you consult with a tax-planning professional with regard to your personal circumstances.