I’m highlighting this again because it can impact so many investors during tax season:
If you own a REIT, chances are you love the fact that they pay great dividends, but hate the fact that at tax time, you have to wait for a corrected 1099 to come in March. The reason for this is that many REITs, as well as some mutual funds, widely-held mortgage trusts, and real estate mortgage conduits, reallocate their dividends or reclassify their long term capital gain distributions. Because they must pass through so much of their income, the government gives them until the end of their fiscal year, which for most of these companies occurs in February.
For example, The College Investor Portfolio has a position in the REIT American Capital Agency. This REIT invests solely in mortgage-backed securities. AGNC’s last dividend had a record date of 12/31/10, but a payment date of 1/27/11. Due to this, the 1099 received from Scottrade did not include the final payment, and also did not characterize the other dividend payments and capital gain distributions.
You Don’t Need To Wait!
However, there is no reason to despair and wait until a corrected 1099 comes in the mail. Investors can go to the company’s website and almost all REITs will post the final dividend and capital gain allocation. See this example below of AGNC’s:
Now, since I know exactly how many shares I had at each date, I can do the math, and input the correct amounts on my tax statements. When the corrected 1099 does come in March, I can verify, but it should match 100% to what is posted in the table.
Like I said earlier, this applies to almost all investment vehicles, but REITs are the most common.
If you are in this situation, you should really consider going to the company’s website and finding this information, especially if you expect a return when you file.
Hope this helps!
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.