By this time, you’re probably getting bombarded with all things tax-related, so we’ll keep this brief.
A couple weeks ago we shared our 2019 Tax Planning Checklist as a guide to help you gather your tax forms. Two of the forms listed were the Form 1099 – INT and Form 1099 – DIV, each of which respectively report any interest and dividends/capital gains income you earned from your accounts. Like any other income, these earnings are taxable and must be reported, even if the amounts seem immaterial.
Did You Know?
Financial institutions are not required to send you a Form 1099 if you earned less than $10 in interest or dividends/capital gains. That does not excuse you from your responsibility to report it.
So, if you didn’t receive a Form 1099, how do you find out how much exactly you earned? Your year-end statement. If you did not receive a statement, now is the time to contact your bank or financial institution.
Good to Know
Most online tax software programs use a rounding method, so you may notice any income below $0.50 being automatically rounded down to $0. The IRS allows the rounding of cents to whole dollars, so no need to worry! With that said, you are required to report any income that is $0.50 or more if using this method.
THE BOTTOM LINE:
Don’t take it as a green light to cheat on your taxes just because you earned an amount you deem ‘insignificant’. To Uncle Sam, income is income and it’s best to stay on good terms with him.