Timely Tax Season Tidbits
Timely Tax Season Tidbits
January 26, 2023
By John H. Robinson, Owner/Founder Financial Planning Hawaii
Tax Season 2023…
Hooray for Tax Season! … said no one ever. While we cannot make the unpleasantness of completing and filing your tax
returns go away, we can at least keep you informed and educated about tax reporting issues and tax law changes that may
pertain to your investment accounts. Here are answers to some of the common questions we field each year.
When Will I Get My 1099?
1099-Rs documenting 2022 taxable distributions from IRAs and retirement accounts are available online for most FPH
clients. Ditto for 1099-Qs which report distributions from 529 Plans. Consolidated 1099s for brokerage accounts, which
include IRS Forms 1099-DIV, 1099-INT, and 1099-B, will be available by the end of February for most clients on both the
NFS/Fidelity and Schwab/TD Ameritrade custodial platforms. A consolidated 1099 will be issued if you received more than
$10 in dividends or interest or had a closing transaction (including maturing securities) in a taxable investment account.
Please note that we need written authorization to deliver tax documents to your CPA or tax preparer. We can always
deliver them to you directly via secure email or upload to them your eMoney vault.
2023 REQUIRED MINIMUM DISTRIBUTIONS (RMDS): How Do We Process Them?
Clients who are age 73 or older in 2023 and who own IRAs or other retirement accounts or who are non-spouse
beneficiaries of inherited IRAs/Roth IRAs are required (with a few restrictive exceptions) to take distributions from the
accounts before year-end. The amount of the distribution is based on the 12/31/2022 account values and life expectancy
tables provided by the IRS. We have the RMD calculations for nearly all FPH clients, and Alicia has already begun reaching
out to clients to get the distributions done early in the year.
IRS rules permits clients with multiple IRAs to take the total RMD amount from a single IRA or any combination of IRAs.
RMDs may also be aggregated if you have multiple 403(b) plan accounts. However, if you have multiple 401(k) plan
accounts, you must take a separate RMD from each one. Note: IRS rules do not permit taking an RMD from one account
type to satisfy the RMD from another type of account. For example, you may not withdraw the total 403(b) RMD from an
Required Minimum Distributions (IRS.gov)
What You Need to Know about the Still Working Exception (Ed Slott & Co)
DO YOU HAVE ANY HELPFUL TAX PREP TIPS OR ADVICE ON COMMON MISTAKES TO AVOID?
● Taxpayers have until April 15th, 2023 to make prior year contributions to traditional IRAs and Roth IRAs.
Remember that tax filing extensions do NOT extend the deadline for IRA and Roth IRA contributions.
● The 2022 contribution limit is $6,000 for taxpayers under age 50 and $7,000 for taxpayers age 50+. For the 2023
tax year, these limits have been raised to $6,500 and $7,500, respectively.
● Although the deadline for establishing qualified retirement plans for 2022 was 12-31-2022 for most plans (10-31 for
SIMPLE IRAs). Simplified Employee Pensions (SEP-IRAs) may be established as late as the business owners tax
filing deadline plus extensions. [SEP Plan FAQs (IRS.gov)]
● Don’t forget that the proceeds from maturing certificates of deposit that you purchased in your taxable investment
account(s) will appear on your 1099-B and must be reported on Schedule D along with other closing transactions.
Assuming you purchased the CDs as new issues and you held to maturity, there will be no capital gain or loss.
The failure to report the transaction will likely result in your receiving a CP 2000 Notice from the IRS. The interest
you receive will be reported to IRS on your 1099-INT and will be reportable on Schedule B.
● Delaware Life and Putnam Investments each publish extremely useful annual “cheat sheets” each year that
present the latest tax rates, schedules, and contribution limits. I always have these at my finger tips for quick and
easy reference throughout the year. Links are as follows:
Securities offered through J.W. Cole Financial, Inc. (JWC) member FINRA/SIPC. Advisory services offered through Financial
Planning Hawaii and J.W. Cole Advisors, Inc. (JWCA). Financial Planning Hawaii and JWC/JWCA are unaffiliated entities.
Fee-only financial planning services are provided through Financial Planning Hawaii, Inc. DBA Fee-Only Planning Hawaii, a
separate state of Hawaii Registered Investment Advisory firm. Financial Planning Hawaii does not take custody of client
assets nor do its advisers take discretionary authority over client accounts.
The information contained herein is general in nature. Neither Financial Planning Hawaii nor J.W. Cole provides
client-specific tax or legal advice. All readers should consult with their tax and/or legal advisors for such guidance in advance
of making investment or financial planning decisions with tax or legal implications.