Why Does TD Ameritrade Issue Corrected Form 1099s?

We got the answer from our Director of Tax Services

February 21, 2014 4:52 PM ET

There's some debate over whether Albert Einstein actually said, "The hardest thing in the world to understand is the income tax," a quote that's often been attributed to him. I'd like to think that he did. That way, I can take some comfort from the fact that even a proven genius could find filing his taxes just as daunting as the rest of us do.

Stuart Rubinstein, Managing Director of eCommerce

At TD Ameritrade, we prepare for tax season throughout the year. We are always working to improve the tax-related resources and communications we provide. Make sure to visit our Tax Center to find your tax documents, as well as FAQ, articles, and a recent addition — videos that show you how to import your 2013 TD Ameritrade data into tax preparation software.

As a client myself, I've wondered why some years I receive an initial Form 1099 from TD Ameritrade, and then a corrected form. To get all my 1099 questions answered, I went straight to the top and asked our Director of Tax Services, Becky Groves.




SR: Why does TD Ameritrade issue corrected 1099s to some clients?BG: Corrected 1099s are typically issued when an investor holds real estate investment trusts (REITs), unit investment trusts (UITs), mutual funds, and even some equities that reallocate or reclassify their distributions for the previous year in January of the new year or later. Investors who hold real estate mortgage investment conduits (REMICs) and royalty trusts should also be prepared for revised forms, as the issuers do not normally release their information until early March.

So basically, it all comes down to timing. We are dependent on issuers of securities to get us the data for the tax forms. If we haven't received the corrected data by the time we send 1099s to clients, then we have to issue a corrected 1099 once we do receive it.


SR: Does TD Ameritrade do anything to minimize the number of corrected 1099s that are issued?BG: Yes. This year we're trying a phased approach. We think this is a great way to get the majority of forms out more quickly, while at the same time avoiding corrections where possible. Rather than waiting, we're sending out forms to clients that we don't believe will be affected in a first phase, and sending forms to those whose holdings we believe will be subject to reallocations or reclassifications in later phases.

It's definitely a balancing act. We want to get the forms out as quickly as we can, but we also want to minimize the number of corrected forms and be certain of the integrity of the data. We listen to client feedback, and we know that people depend on receiving their 1099s as soon as possible, so they have the time they need to prepare their returns. On the other hand, we don't want a client to have to submit an amendment if it can be avoided.


SR: How will I know if I have been issued a corrected 1099?BG: We'll send an email (to the address we have on file for your account) to let you know, and we'll mail you the corrected form. You should also log in to tdameritrade.com and go to My Account > Tax Center. In the Tax Center, you'll see the tax documents that have been issued for your account in the "Your year-end tax documents" module. If you don't see the form you're looking for, you can check the Tax Documents Calendar to see when the form will be mailed and be available online. Before you file your return, it's probably a good idea to check and make sure you haven't been issued a correction.


SR: What should I do if I am issued a corrected 1099 and I have already submitted my return, or if I think I might be at risk for receiving one?BG: In both cases, the best advice is always to talk to a tax advisor. If you have already filed and then receive a corrected form, your advisor will probably let you know you need to submit an amended return on Form 1040X, which is what is usually required by the IRS.

If you hold the types of security that are often affected and think it is likely you will receive a corrected form, I would talk to your tax advisor about when it makes the most sense for you to file your return.


SR: Is there anything else you think our clients should know about Tax Services at TD Ameritrade?BG: Just that we are always working to improve the data and documents we provide and their delivery. We want to make the TD Ameritrade portion of our clients' tax preparation as simple as possible, and we depend on feedback to do so. I would ask our clients to let us know what is working, and what we can do to make next tax season better. TD Ameritrade does not provide tax advice. Please consult your tax advisor for additional information.