Here are answers to some questions we've received from clients recently, along with links to additional information and helpful resources
Taxes

Help for your common tax questions

Here are answers to some questions we've received from clients recently, along with links to additional information and helpful resources
5 minute read

General

Taxes are due on April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia—even if you don’t live in the District of Columbia. If you live in Maine or Massachusetts, you have until April 19, 2022 because of the Patriots’ Day holiday in those states.  

You can expect your forms starting in late January through the end of February. Please visit our tax forms schedule or log in to your personalized tax forms page to learn when specific tax forms will be ready. 

If you still receive paper copies of your tax forms by mail, you should get them shortly after they're posted online. 

A few reminders:  

  • For 1099-DIVs: You won't see any dividend or capital gains distributions for your investment if the total amount for the year was less than $10, unless you had taxes withheld. 
  • For 1099-Bs: If you own Vanguard Real Estate Index Fund, you'll receive your Form 1099-DIV and Form 1099-B, if applicable, for this fund in February when the fund's return of capital is calculated. 
  • For Vanguard Managed Allocation Fund: You'll receive your Form 1099-DIV and Form 1099-B, if applicable, for this fund in February when all income reallocations are completed. 

If you transitioned to our new investment platform during the calendar year, you may receive two sets of tax forms: one set in January (for the mutual fund platform) and another set in February (for the brokerage platform). You may need both to report your state and local tax liability. 

With a few exceptions, in future tax years you'll likely receive one 1099-consolidated Form for all your mutual fund and brokerage holdings. 

In general, 1099 forms report income other than wages. Depending on the types of accounts you have, your transactions, and your investment income, you may receive several different tax forms. Most forms are required to be provided only for amounts of $10 or more or if taxes were previously withheld. You must report any investment income or distributions (reported on your year-end account statement) to the IRS. 

You'll get a 1099-DIV each year you receive a dividend distribution, capital gains distribution, or foreign taxes paid for your taxable investments. 

But if the amount is less than $10 for the year, no 1099-DIV is sent. This is particularly likely for money market funds because low interest rates have held their yields down. But remember, you're still required to report that income to the IRS. 

Retirement accounts

The deadline for making IRA contributions for a given tax year is your tax filing deadline for that year, not including extensions (typically April 15 of the following year).

Generally, a QCD is a direct transfer of funds from an IRA owned by an individual over age 70 ½, payable directly to a qualified charity, as described in the QCD provision in the Internal Revenue Code. The maximum annual distribution amount that can qualify for a QCD is $100,000. In general, QCDs must be reduced by the amount of deductible IRA contributions made for the year you turn 70 ½ or later. This limit would apply to the sum of QCDs made to one or more charities in a calendar year. The QCD is excluded from your taxable income. The QCD will be reported as a normal distribution on your 1099-R for any non-Inherited IRAs. For Inherited IRAs, the QCD will be reported as a death distribution. You should keep an acknowledgement of the donation from the charity for your tax records because you'll also need to report the QCD on your tax return. Information about how to report QCDs on your income tax return is available on the IRS website.

If you have any questions, please consult a qualified tax professional. 

The financial institution that held the employer plan will provide you with a 1099-R documenting the amount of the distribution. You will also receive a 5498 from Vanguard confirming that a rollover took place. Form 5498 is provided to clients and filed with the IRS in May for informational purposes only. Though not required for filing purposes, you should retain this form with your tax records. 

IRA asset transfers directly from one IRA custodian to another are not taxable and are not reported on Form 1099-R.

Download tax forms and view your personalized tax form schedule

Non-retirement accounts

If we have cost basis for your non-covered shares, we report it on your 1099-B but we don't report it to the IRS. 

Vanguard may loan out shares of securities held in margin accounts to short sellers. If you own one of these securities in your margin account and the security pays a dividend while it's eligible to be loaned out, Vanguard may pay you a substitute payment in lieu of the dividend. Substitute payments in lieu of dividends or interest are reported in Box 8 of Form 1099-MISC. Since these substitute payments are taxable at your marginal tax rate instead of the qualified dividend rate, Vanguard will also issue you a reimbursement grossed up to include income taxes you may incur. This reimbursement will be processed later in the year and reported in Box 3 of Form 1099-MISC. 

If your mutual fund has foreign investments and passed your portion of taxes paid to foreign countries, you'll see that value reported. Dividends are grossed up to show the foreign taxes paid. You can take the foreign taxes paid as a deduction or a credit on your taxes. A credit is generally the more beneficial option, but you should check with a qualified tax professional about your individual situation.

If applicable, you'll see Section 199A dividends from income paid by real estate investment trusts (REITs) and widely held fixed investment trusts (WHFITs) in Box 5 on your 1099-DIV. Please consult a tax advisor to see if this applies to you. If you don't see any amounts reported in Box 5, the deduction may not be applicable to your holdings at this time.

Vanguard Variable Annuity and Vanguard 529 Plan

You'll receive a 1099-R tax form if you took a withdrawal from your Vanguard Variable Annuity during the tax year.

Tax forms for the Vanguard Variable Annuity aren't available online.

All Vanguard Variable Annuity tax forms will be mailed by January 31.

Form 1099-Q will only be issued if a withdrawal was processed during the calendar year. 529 tax forms are accessible by selecting 'Go to my 529 plan account area' under your 529 account header on the Balances and Holdings page. For information on contributions, select “Statements” from the My Accounts tab.

TurboTax

Although we've offered discounts in the past, Vanguard no longer extends a discount on TurboTax software.

If you get a blank screen after logging on to vanguard.com, close the blank window and click the TurboTax link again. You'll be taken to the TurboTax site.

If you filed your taxes online last year, you can use the same TurboTax user ID and password. New online users need to create an account on the TurboTax site.

The software asks simple questions and automatically fills in your answers to guide you through your tax return. TurboTax checks and rechecks your answers as you go along, looking for errors and missed deductions, helping to eliminate mistakes and potential penalties while maximizing your tax savings.

Intuit, makers of the TurboTax products, uses the most advanced technology available to evaluate its software and web-based services to protect your tax information and to make sure your data is handled securely. Vanguard has no access to your tax information. Generally, tax preparers, such as TurboTax, must obtain your signed consent on paper or electronically before they can disclose your tax return information to anyone or use it for any purpose other than preparing and filing a tax return.

Vanguard can't provide technical support for or answer specific questions about TurboTax products. Visit the TurboTax website for additional support.

Yes, if you're using the online software. You'll be able to import Forms 1099-B, 1099-DIV, and 1099-R directly into your returns. This feature applies to Vanguard mutual fund and brokerage accounts; it doesn't apply to tax-deferred, employer-sponsored retirement plan accounts.

If your tax forms don't import into TurboTax, there are a couple of things you can check:  

  • The institution you selected (Vanguard mutual funds or Vanguard Brokerage). 
  • The username for the Social Security number associated with the tax form you're trying to download. Remember, for joint accounts, use the Social Security number for the primary account holder.  

In some cases, no tax forms are available to download, but you may still get prompts from TurboTax. 

The online federal products include free IRS e-file, which allows you to pay federal taxes with a bank transfer or credit card or get a refund by depositing it directly into a bank account or your Vanguard mutual fund or brokerage account.  

The IRS and most state tax authorities permit online tax return filing, but be sure to confirm this with your state tax authority.  

The IRS and state tax authorities send an electronic acknowledgement for each return successfully e-filed; Intuit will provide this confirmation to you once your return is received. 

If you pay an IRS or state penalty or interest because of a TurboTax calculation error, Intuit will pay you the penalty and interest.

*All investing is subject to risk, including the possible loss of the money you invest. 

When taking withdrawals from an employer-sponsored plan or traditional IRA before age 59½, you may owe ordinary income tax plus a 10% federal penalty tax. 

Please consult an independent tax or financial advisor for specific advice about your individual situation. 

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