Saturday, January 24, 2009

Your 1099-B will be late this year

I received a mailing from my broker that my 1099 wouldn't be mailed until February 15 of this year. It said that the IRS reporting deadline has changed from January 31. What the heck?

Well, it turns out I can blame Congress. The reason for the change is brokers now have to include tax basis as well as sales proceeds on all sales you make in the tax year. I have a couple of issues with this as a reason for pushing back the deadline.

First, the 1099 forms are generated by a computer. It's not like people are calculating the tax basis for all my sales transactions by hand. So once the computer program is updated to print the basis on the 1099, there is no other work. The incremental processing time to include this when the 1099 forms should be trivially small, or else the programmers who made the change should be fired. No extra time is needed.

Second, the tax basis isn't required to be put on the 1099 forms for 2008. It's not going to be required until a later date. So the brokers are being given more time to add information to the 1099 form that they aren't even required to add this year.

Third, the change in the law only applied to the 1099-B, but since most brokers send out a combined 1099 with the 1099-DIV and 1099-INT with the 1099-B, the IRS is allowing the later date to apply to the entire combined 1099.

Why am I making a big deal about this? Because I like to get my taxes done early, and this will delay me by at least 2 weeks. The worst part is that my broker usually screws up the dividend classification (qualified vs. non-qualified) and has to send me a corrected 1099. I'm sure that it still won't catch the mistakes it's made in the past even with this deadline extension, and I'll be getting a corrected 1099 even later than usual. OK, rant done.