As we prepare for the upcoming tax filing season, here are a few reminders:
1099 Delivery Reminders
Most Schwab 1099s should be available online by the end of this month (February 28).
- Reportable interest, dividends, realized gain/loss (cost basis), and IRA distribution details are included on your 1099 tax documents coming directly from Schwab. Please provide all your 1099s to your tax professional for preparing your 2024 tax return.
- If you have established access to Schwab Alliance, all tax forms should be available under “Accounts” on the “Statements” page where you can access a 1099 dashboard. From here you can print, save, or electronically send 1099s to your tax professional.
- Also, if you wish to download your account information directly into TurboTax or H&R Block you will need to use your Schwab user ID and password and then acknowledge permission to share information with the third-party software.
- We fully understand the frustration corrected 1099s often cause as neither JNBA nor Schwab can control this delay in adjusted information. With global e-commerce, companies often must modify reported interest, dividends, or capital gain information. As a result, by law, those companies are required to pass these revised figures on to the appropriate parties, in this case, Schwab.
Reporting Treasury Interest on Non-IRA Accounts
As a reminder, and as appropriate, we have strategically invested cash in Treasury funds to generate additional interest. A key benefit of interest earned from Treasury funds is that in some states it is not reportable on state tax returns. In these situations, Treasury interest should be excluded from your state tax return to prevent state-exempt interest being subject to taxation.
The most common Treasury fund used as our primary money market is the Schwab US Treasury Money Fund. Below is an example of where to find this on a 1099. We encourage you to work closely with your tax professional to help ensure accurate reporting of any Treasury interest in non-IRA accounts. Please reach out to your JNBA Advisory Team with any questions.
Tax Returns
JNBA requests your 2024 tax returns to provide well-rounded and accurate financial planning advice. If you have not previously signed a Tax Professional Authorization form, please send a copy of your final 2024 tax return to your JNBA Advisory Team or upload your tax return to your JNBA Client Portal.
IRA Contributions
To make the April 15, 2025 deadline for IRA contributions, contribution checks (made payable to Charles Schwab with “2024 contribution” written in the memo line) should arrive at our office no later than April 11, 2025.
- You have until the tax filing deadline (April 15, 2025) or the date you file your tax return (whichever comes first) to finalize IRA contributions for 2024.
- If you need to confirm your IRA contributions already made for 2024 to determine if any additional contribution can be made or are considering moving money from a non-IRA account to an IRA for your 2024 contribution, remember to allow time for processing to meet the April 15, 2025 deadline.
SIMPLE IRA DEFERRAL Updates
Some SIMPLE plans are allowed higher deferral limits. Participants in certain SIMPLE 401(k) and SIMPLE IRA plans can take advantage of an increased deferral limit of $17,600 and an increased catch-up limit of $3,850 (both unchanged from 2024) if their employer meets one of the following conditions:
a. Has 25 or fewer employees receiving at least $5,000 of compensation, or
b. Employs more than 25 but not more than 100 employees and makes either a 4% matching contribution or a 3% nonelective contribution
QCD – Qualified Charitable Distribution
If you are over the age of 70 ½ and gave money from your IRA directly to a charitable organization, please share those distribution details with your tax professional. The 1099-R generated for your IRA shows total distributions but does not include details on distributions to a qualified charitable organization. This will be important information to share as distributions to qualified 501(c)(3) charities, up to $105,000, are not taxable for 2024.
Social Security Tax
Those who worked for multiple employers in 2024 may have paid too much in Social Security tax. The maximum amount withheld by employers was $10,453.20 per taxpayer. If your Social Security withholdings exceed that maximum, you may be able to claim the excess as a credit.
Long-Term Care Insurance
If you own long-term care insurance, you may be eligible for an income tax credit for premiums paid during the 2024 tax year. Specifics vary from state to state, and you should consult your tax professional for additional information.
Minnesota Resident 529 Plan Contributions
As a Minnesota resident, you may be eligible for a Minnesota nonrefundable income tax credit or an income tax subtraction for contributions to any state’s 529 plan. The nonrefundable income tax credit is subject to phase-out. You should consult your tax professional for additional information regarding the credit or subtraction.
Health Insurance
The Affordable Care Act requires that a taxpayer and each member of his or her family has qualifying health coverage for each month of the year, qualifies for an exemption, or makes an individual shared responsibility payment when filing his or her tax returns. Like last year, those who had qualifying health coverage for the whole year will simply have to check a box stating that they are covered.
Important Employer-Provided Benefit Reminders
As you gather documents for your 2024 tax return, this is a good time to complete a thorough review of your employer-provided benefits. Look for opportunities to increase your 401(k) contributions to maximize your savings for the new tax year, confirm that the beneficiaries listed on your employer-provided benefits are still accurate, and determine if any adjustments should be made to your tax withholding. Withholding adjustments can be a good topic to discuss with your tax professional as they review your information to prepare your 2024 tax return.
JNBA is not an accountant and no portion of the above should be construed as accounting advice. All accounting issues should be addressed with an accounting professional of your choosing.
Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from JNBA Financial Advisors, LLC.
Please see important disclosures information at jnba.com/disclosure.
