Documents Used to Report Income on Your Tax Return in Retirement

Taxable Income In Retirement Usually Shows Up on the Following Documents

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Wait for documentation to properly report income in retirement. ericsphotography/GettyImages

In retirement the process of gathering documents to prepare your tax return won’t change all that much. Some of the tax documents you’ll receive will be familiar, others will be new. When it comes to reporting sources of income, below is a list of the basic tax forms you should expect to receive.

I’ve also included some questions to ask that may help you avoid income-reporting mistakes.

Overview of 1099s and What to Check

1099s come in many forms.

Below are several common ones you’ll get in retirement.

1099-INT: If you have an interest bearing bank account or CD, you’re probably used to receiving a 1099-INT each year, which reports the amount of taxable interest income that you need to include on your tax return.

1099-DIV: If you own stocks or stock mutual funds that pay dividends and you hold these investment in an account that is not a designated type of retirement account (like an IRA, Roth IRA, or 401k) then you’ll get a 1099-DIV which reports the amount of dividend income that you need to include on your tax return.

1099-R: In retirement, once you start taking distributions from retirement accounts, you should also expect a 1099R each year. A 1099R is used to report distributions from IRAs and 401ks. Annuity income and pension income are also reported on a 1099R.

SSA-1099: Once you are receiving Social Security benefits, a SSA-1099 form is mailed to you in January of each year and will show the total amount of benefits you received for the prior calendar year.

  If you need a replacement copy, visit the How can I get a form SSA-1099 page of the Social Security website.

For additional info on 1099s see this complete list which includes descriptions of many other types of 1099’s you might expect.

Questions to Keep in Mind When Reporting Income

Did you rollover retirement accounts? If so, check your 1099-Rs carefully. When you roll money from one type of retirement account to another, assuming you do this rollover properly, it is not a taxable event.

However if the firm from which the funds were leaving does not know the money will be rolled over they will report it with a particular tax code on the 1099-R (such as 1099-R code 1 instead of code G) and that will make your tax preparer assume it is a taxable distribution. This is usually easily resolved by showing the funds were in fact deposited into a new retirement account within the 60 day allowable time frame for rollovers. However, I have seen cases where this situation was not caught, and the tax payer ended up paying tax on a distribution that did not really happen.

Did you move accounts? If you moved accounts from one institution to another, you should expect 1099s from both your previous financial firm and your new one.

Did you change addresses? If you moved, keep in mind you may have to track your forms down.

When should you receive your 1099s? Different types of 1099s have different deadlines. In general all your 1099s should be in the mail to you by Feb 15th(or the next business day if the 15th falls on a weekend.)The financial institution can mail the forms on the 15th, so you may not receive them until several days later. If you are signed up for online access to your accounts, you may find it quicker to download your tax statements rather than wait for the mail.

In addition, if you’re expecting any income to be reported on a K-1, those don’t have to be sent out until later. See K-1 section below.

Overview of K-1s, and Who Should Expect Them

Partnerships and S corps report income on a tax form called a K-1. Trusts also report income distributed to beneficiaries on a K-1. If you invest in a partnership, or a form of private investment that may be structured as a partnership, expect to receive K-1s.

You may also own a publicly traded master limited partnership (these are often held in brokerage accounts) that will report income on a K-1, and if you own an investment referred to as an alternative investment or private placement, it is likely to report taxable income on a K-1.

K-1’s do not have to be sent out until March 15th. If the business issuing the K-1 extended the business return, then the K-1 does not have to be sent until Sept 15th.

Investors who own investments that report income on a K-1 should expect that in most years they will have to file an extension as there is a good chance they will be waiting on their K-1 forms.

If You Worked in Retirement Expect W-2s or a 1099-MISC

If you worked as an employee, expect to receive a W-2. If you worked as an independent contractor your income would be reported on a 1099-MISC.

Form 5498

If you have retirement accounts, in May of each year you receive a Form 5498. This form is not needed to prepare your tax return. If you want to know what this form is for, read Form 5498 Basics.

Deductions

This article focuses on the most common documents received to report income in retirement. Of course in addition to income, you’ll have to gather info to support deductions.