More Errors in 1099s Expected Due to Confusing Dividend Tax Cut
A tax cut that was welcome nine months ago is now creating confusion and hassles for financial companies and taxpayers.
Last week, the Treasury Department and the IRS agreed to make certain provisions of the Tax Technical Corrections Act of 2003 related to dividend income available to taxpayers in advance of its passage. These provisions will be of particular interest to certain mutual fund shareholders and other investors who are completing their 2003 tax returns.
"The percentage of 1099s that have errors will be very high," says Martin Nissenbaum, national director of personal income-tax planning at Ernst & Young.
Some brokerage firms are letting investors know now that their 1099 statements may be revised. Wachovia Securities mailed a brightly colored notice with this year's 1099s, saying that the dividend-tax changes could result in investors receiving "one or more" amended 1099s.