Monday, February 6, 2012

Andy's Report from "Inside ETFs" Conference

1 - Last Sunday through Tuesday, I attended the Inside ETFs conference in Hollywood, Florida. This particular conference is all about the nitty-gritty of investing, and this year's event didn't disappoint. For a two-minute video report, click on the image below. A little further down, following This Week's Economic News, I have also included a video synopsis of our March 17 panel discussion, New Realities: The Global Economy.

2 - With tax season comes the all-important Form 1099, on which financial institutions such as TD Ameritrade report taxable income to clients. You may be dismayed to receive a second or third "corrected" 1099 on your account. This has been an issue for clients for several years, and so I have written an explanation that I urge you to read. Scroll farther down the page to the article entitled "What's the Deal With 1099s?"

3 - Reminder for lady clients: Please be our guest at a special Valentine's Day Ladies' Tea to be held on Tuesday, February 14 at 3:00pm in the Depot Room. Please click here for more information and to RSVP.

Have a productive  week!


What's the Deal with 1099s?
by C.A. Millard

Every year, our clients receive 1099 forms from TD Ameritrade. The 1099 is an IRS form on which a financial institution reports taxable events that have occurred within the client's account. The client or her tax preparer utilizes the form in preparing her tax return.

All that is straightforward enough. But just about every year, some clients are caught off-guard (and taken aback) by receiving a second (and sometimes a third) 1099 from TD Ameritrade. If you receive one of these "corrected" 1099s, you may understandably get the impression that Ameritrade "didn't get it right the first time" and now has to re-issue the form to correct its mistake. That impression would be wrong.

The 1099 issued by TD reflects the information provided to it by the stocks, bonds, mutual funds and ETFs that are represented in your account; each fund and ETF contains at least one additional layer of holdings, each of which reports its own info to the fund, which in turn reports to TD, which finally compiles everything and reports to you on the 1099. As a result, your 1099 may represent information provided by literally thousands of financial institutions.

Sometimes, one or more of those institutions needs to change its information. This could be the result of new information that was reported to it, a change in the way the IRS views a particular transaction that took place during the year, or the occasional (and inevitable) human error.

Corrected 1099s are a fact of life. The changes are almost always minor and have very little if any effect on the client's tax liability. My advice is this: If you receive a corrected 1099 before you have filed your tax return, discard the old one and use the new one. If you get a corrected 1099 after you have filed your return, compare it to the original and ask your tax professional if it is worth filing an amended return.

Here is TD Ameritrade's schedule for distributing corrected 1099s this year:

1st Correction Cycle - February 24, 2012
Reports reclassified income (not captured on Consolidated 1099 Forms to be issued in mid-February, 2012) that was reported to TD Ameritrade between February 1, 2012, and February 15, 2012.

REMIC cycle - March 15, 2012
To be completed no later than March 15, 2012. The precise date will be determined after the necessary data has been furnished to TD Ameritrade by the issuers. **This cycle also reports reclassified income not captured in previous cycle(s).**

2nd Correction Cycle - March 9, 2012
Reports reclassified income that was reported to TD Ameritrade between February 16, 2012, and February 29, 2012.

3rd Correction Cycle - March 21, 2012
Reports reclassified income that was reported to TD Ameritrade between March 1, 2012, and March 14, 2012.

4th Correction Cycle - April 11, 2012
Reports reclassified income that was reported to TD Ameritrade between March 15, 2012, and April 4, 2012.

5th Correction Cycle - April 25, 2012
Reports reclassified income that was reported to TD Ameritrade between April 5, 2012, and April 18, 2012.

6th Correction Cycle - May 23, 2012
Reports reclassified income that was reported to TD Ameritrade between April 19, 2012, and May 21, 2012.

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