Vanguard updated 1099 in August!

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fast_and_curious
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Vanguard updated 1099 in August!

Post by fast_and_curious » Sun Aug 12, 2018 8:43 pm

I have been helping my parents with their taxes for the last few years. They received an amended 2017 1099-DIV this week from Vanguard, with several hundred dollars difference in dividends (and qualified dividends) for a Vanguard mutual fund. So I spent a couple hours this afternoon helping figure out the changes and file an amended 1040 and associated state form.

This post is mainly to rant and vent, but I think about all the extra time and hassle spent by not only by the customers receiving these late amended documents, but then also by the IRS workers who have to process all the amended 1040s now due. Just curious if Vanguard gets any penalty - other than increased postage - for issuing such late changes? Or can they be as sloppy as they want, issuing changes however late they feel like it, and not be responsible for any of the extra time and expense? (Again, this was for a Vanguard mutual fund held at Vanguard, not like some esoteric brokerage investment!)

A related question - hypothetical since in this case the change was in my parents' favor - but if additional tax were due because of this amended form, I'm sure Vanguard would not pick up the penalty & interest, would they?

Like I said, this is mainly just an internet rant, but it feels (slightly) better to get this off my chest. :)

livesoft
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Re: Vanguard updated 1099 in August!

Post by livesoft » Sun Aug 12, 2018 8:45 pm

What's the rush to send in an Amended Return? There might be a correction to the correction.

We have not filed 2017 taxes yet. I'll get around to it in October.
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thangngo
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Re: Vanguard updated 1099 in August!

Post by thangngo » Sun Aug 12, 2018 8:57 pm

I don't usually file my tax until October for this reason.

Is it international fund? which fund is it? I don't see any 1099-DIV this year...

AlphaLess
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Re: Vanguard updated 1099 in August!

Post by AlphaLess » Sun Aug 12, 2018 9:03 pm

livesoft wrote:
Sun Aug 12, 2018 8:45 pm
What's the rush to send in an Amended Return? There might be a correction to the correction.

We have not filed 2017 taxes yet. I'll get around to it in October.
Upvote x 100.

If already filed, what's the rush to amend EVER?

AlphaLess
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Re: Vanguard updated 1099 in August!

Post by AlphaLess » Sun Aug 12, 2018 9:04 pm

fast_and_curious wrote:
Sun Aug 12, 2018 8:43 pm
A related question - hypothetical since in this case the change was in my parents' favor - but if additional tax were due because of this amended form, I'm sure Vanguard would not pick up the penalty & interest, would they?
Why would they?

livesoft
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Re: Vanguard updated 1099 in August!

Post by livesoft » Sun Aug 12, 2018 9:05 pm

livesoft wrote:
Sun Aug 12, 2018 8:45 pm
We have not filed 2017 taxes yet. I'll get around to it in October.
And the cool thing is that we are getting a refund. If we had gotten the refund earlier, we would have just invested in an international index fund and lost money.
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thangngo
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Re: Vanguard updated 1099 in August!

Post by thangngo » Sun Aug 12, 2018 9:09 pm

livesoft wrote:
Sun Aug 12, 2018 9:05 pm
livesoft wrote:
Sun Aug 12, 2018 8:45 pm
We have not filed 2017 taxes yet. I'll get around to it in October.
And the cool thing is that we are getting a refund. If we had gotten the refund earlier, we would have just invested in an international index fund and lost money.
Only on hindsight. It could be very much the other way.

bltn
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Re: Vanguard updated 1099 in August!

Post by bltn » Sun Aug 12, 2018 9:09 pm

livesoft wrote:
Sun Aug 12, 2018 8:45 pm
What's the rush to send in an Amended Return? There might be a correction to the correction.

We have not filed 2017 taxes yet. I'll get around to it in October.
Wow. I file our taxes by the second week in March and would do it before the end of February if I could get all my records early enough.
Hate to put stuff off.

livesoft
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Re: Vanguard updated 1099 in August!

Post by livesoft » Sun Aug 12, 2018 9:12 pm

thangngo wrote:
Sun Aug 12, 2018 9:09 pm
Only on hindsight. It could be very much the other way.
Nah, I'm always losing money on something.
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celia
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Re: Vanguard updated 1099 in August!

Post by celia » Sun Aug 12, 2018 9:18 pm

It is the taxpayer's responsibility to ensure they have all the tax forms and that they are correct (as far as they can tell). Don't you do a cursory comparison between the dividends, interest, capital gains they receive each year and what the tax forms report? Then if the tax forms are wrong, you can notify the custodian (or correct your misunderstanding).

Spirit Rider
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Re: Vanguard updated 1099 in August!

Post by Spirit Rider » Sun Aug 12, 2018 10:49 pm

fast_and_curious wrote:
Sun Aug 12, 2018 8:43 pm
This post is mainly to rant and vent, but I think about all the extra time and hassle spent by not only by the customers receiving these late amended documents, but then also by the IRS workers who have to process all the amended 1040s now due. Just curious if Vanguard gets any penalty - other than increased postage - for issuing such late changes? Or can they be as sloppy as they want, issuing changes however late they feel like it, and not be responsible for any of the extra time and expense? (Again, this was for a Vanguard mutual fund held at Vanguard, not like some esoteric brokerage investment!)
You do understand what a mutual fund is?

A mutual fund simply reports the dividends reported to them. In most cases the revised 1099s are due to changes in dividend reporting to them.

Your rant is misdirected.

TravelGeek
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Re: Vanguard updated 1099 in August!

Post by TravelGeek » Sun Aug 12, 2018 11:02 pm

celia wrote:
Sun Aug 12, 2018 9:18 pm
It is the taxpayer's responsibility to ensure they have all the tax forms and that they are correct (as far as they can tell). Don't you do a cursory comparison between the dividends, interest, capital gains they receive each year and what the tax forms report?
Uhh, no. I figure their computer gets it right. And in the unlikely event that it doesn’t, it is even less likely that I am the only one affected by it, and so I count on you to catch it and notify Vanguard and on them to then issue new 1099s for everyone. Thank you! :beer

Jokes aside, how often does it happen does updated 1099s get issued after the initial filing deadline? I usually file around early April.

Also, what happens on the IRS side when an updated 1099 gets issued? Do they automatically reprocess all the already processed tax returns? How long does the OP have to file an amended return?
Last edited by TravelGeek on Sun Aug 12, 2018 11:05 pm, edited 1 time in total.

zmaqoptyxbglp
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Re: Vanguard updated 1099 in August!

Post by zmaqoptyxbglp » Sun Aug 12, 2018 11:04 pm

Spirit Rider wrote:
Sun Aug 12, 2018 10:49 pm
fast_and_curious wrote:
Sun Aug 12, 2018 8:43 pm
This post is mainly to rant and vent, but I think about all the extra time and hassle spent by not only by the customers receiving these late amended documents, but then also by the IRS workers who have to process all the amended 1040s now due. Just curious if Vanguard gets any penalty - other than increased postage - for issuing such late changes? Or can they be as sloppy as they want, issuing changes however late they feel like it, and not be responsible for any of the extra time and expense? (Again, this was for a Vanguard mutual fund held at Vanguard, not like some esoteric brokerage investment!)
You do understand what a mutual fund is?

A mutual fund simply reports the dividends reported to them. In most cases the revised 1099s are due to changes in dividend reporting to them.

Your rant is misdirected.
Is this correction process mostly only applicable to small caps and/or international stocks? I only hold US large caps (500 Index). Should I be concerned / wait a bit? Ideally I would like to not delay filing due to identity theft concerns (hearing people lose their tax refunds). Appreciate your help.

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dccboone
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Re: Vanguard updated 1099 in August!

Post by dccboone » Sun Aug 12, 2018 11:10 pm

Spirit Rider wrote:
Sun Aug 12, 2018 10:49 pm
fast_and_curious wrote:
Sun Aug 12, 2018 8:43 pm
This post is mainly to rant and vent, but I think about all the extra time and hassle spent by not only by the customers receiving these late amended documents, but then also by the IRS workers who have to process all the amended 1040s now due. Just curious if Vanguard gets any penalty - other than increased postage - for issuing such late changes? Or can they be as sloppy as they want, issuing changes however late they feel like it, and not be responsible for any of the extra time and expense? (Again, this was for a Vanguard mutual fund held at Vanguard, not like some esoteric brokerage investment!)
You do understand what a mutual fund is?

A mutual fund simply reports the dividends reported to them. In most cases the revised 1099s are due to changes in dividend reporting to them.

Your rant is misdirected.
+1

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dccboone
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Re: Vanguard updated 1099 in August!

Post by dccboone » Sun Aug 12, 2018 11:10 pm

Spirit Rider wrote:
Sun Aug 12, 2018 10:49 pm
fast_and_curious wrote:
Sun Aug 12, 2018 8:43 pm
This post is mainly to rant and vent, but I think about all the extra time and hassle spent by not only by the customers receiving these late amended documents, but then also by the IRS workers who have to process all the amended 1040s now due. Just curious if Vanguard gets any penalty - other than increased postage - for issuing such late changes? Or can they be as sloppy as they want, issuing changes however late they feel like it, and not be responsible for any of the extra time and expense? (Again, this was for a Vanguard mutual fund held at Vanguard, not like some esoteric brokerage investment!)
You do understand what a mutual fund is?

A mutual fund simply reports the dividends reported to them. In most cases the revised 1099s are due to changes in dividend reporting to them.

Your rant is misdirected.
+1

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Dale_G
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Re: Vanguard updated 1099 in August!

Post by Dale_G » Sun Aug 12, 2018 11:15 pm

So, I am on pins and needles - what was the name of the fund?

Dale
Volatility is my friend

jebmke
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Re: Vanguard updated 1099 in August!

Post by jebmke » Sun Aug 12, 2018 11:19 pm

celia wrote:
Sun Aug 12, 2018 9:18 pm
It is the taxpayer's responsibility to ensure they have all the tax forms and that they are correct (as far as they can tell). Don't you do a cursory comparison between the dividends, interest, capital gains they receive each year and what the tax forms report? Then if the tax forms are wrong, you can notify the custodian (or correct your misunderstanding).
After years of insisting that my controllers do book to tax reconciliations, if I didn't do my own recs my former managers would probably hunt me down.

Like others, I have not filed my taxes yet.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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celia
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Re: Vanguard updated 1099 in August!

Post by celia » Sun Aug 12, 2018 11:36 pm

TravelGeek wrote:
Sun Aug 12, 2018 11:02 pm
celia wrote:
Sun Aug 12, 2018 9:18 pm
It is the taxpayer's responsibility to ensure they have all the tax forms and that they are correct (as far as they can tell). Don't you do a cursory comparison between the dividends, interest, capital gains they receive each year and what the tax forms report?
Uhh, no. I figure their computer gets it right. And in the unlikely event that it doesn’t, it is even less likely that I am the only one affected by it, and so I count on you to catch it and notify Vanguard and on them to then issue new 1099s for everyone. Thank you! :beer
You're quite welcome :sharebeer but if I don't find your error, the odds are good that another Boglehead found it. :D

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celia
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Re: Vanguard updated 1099 in August!

Post by celia » Sun Aug 12, 2018 11:50 pm

Dale_G wrote:
Sun Aug 12, 2018 11:15 pm
So, I am on pins and needles - what was the name of the fund?
The exact fund/holding is likely irrelevant or it would have been found much earlier as it would have impacted all shareholders of the fund. It is probably due to a certain combination of events such as selling at the one year mark instead of after it. Or a QCD taken a day too early. Or buying and selling the same asset on the same day.
Spirit Rider wrote: A mutual fund simply reports the dividends reported to them. In most cases the revised 1099s are due to changes in dividend reporting to them.

Your rant is misdirected.
Mutual funds also need to report interest (bonds), capital gains the fund incurred (short/long term), foreign taxes paid.

Gnirk
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Re: Vanguard updated 1099 in August!

Post by Gnirk » Mon Aug 13, 2018 12:42 am

Welcome to the club! I received a corrected 1099 from Vanguard in July, and then another one in August, which “undid” the changes that were on the July 1099.
Annoying as heck. :annoyed :annoyed :annoyed

SlowMovingInvestor
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Re: Vanguard updated 1099 in August!

Post by SlowMovingInvestor » Mon Aug 13, 2018 12:55 am

celia wrote:
Sun Aug 12, 2018 9:18 pm
It is the taxpayer's responsibility to ensure they have all the tax forms and that they are correct (as far as they can tell). Don't you do a cursory comparison between the dividends, interest, capital gains they receive each year and what the tax forms report? Then if the tax forms are wrong, you can notify the custodian (or correct your misunderstanding).
I do check sales, but as for capital gain distributions, dividends, interest -- absolutely NOT, except for the limited purpose of figuring out foreign tax credit.

After all why stop there ? I could go back and check not just transactions reported on my statements, but also all reporting and calculate if the amount of interest was properly computed. And for MFs, check the dividends actually paid by the companies held by the fund, and verifying that all were passed through. And so on ..

That way lies madness ...

Spewin
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Re: Vanguard updated 1099 in August!

Post by Spewin » Mon Aug 13, 2018 5:39 am

I recently received a corrected 1099 form Vanguard ... For 2015. I owe $50 more tax. Quite a PIA.

bberris
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Re: Vanguard updated 1099 in August!

Post by bberris » Mon Aug 13, 2018 6:29 am

There won't be a penalty. This would fall under reasonable cause, and you filed a correct return with the information you had.

MikeG62
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Re: Vanguard updated 1099 in August!

Post by MikeG62 » Mon Aug 13, 2018 7:05 am

TravelGeek wrote:
Sun Aug 12, 2018 11:02 pm

...Jokes aside, how often does it happen does updated 1099s get issued after the initial filing deadline? I usually file around early April.
In my experience, getting corrected 1099's has gotten a lot better over the years. Going back 10-12 years ago, it was common for me to get corrected 1099's from the two brokers I deal with (neither of which is Vanguard) - often more than one each year and usually in the month of March (I don't ever remember getting one after April 15th). Fast forward to the last few years, the situation seems much improved. Very few if any corrected 1099's. I file my taxes in March. I want to deal with taxes once each year and not multiple times. In fact, once each year is more than enough for me.
Real Knowledge Comes Only From Experience

2015
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Re: Vanguard updated 1099 in August!

Post by 2015 » Mon Aug 13, 2018 11:47 am

SlowMovingInvestor wrote:
Mon Aug 13, 2018 12:55 am
celia wrote:
Sun Aug 12, 2018 9:18 pm
It is the taxpayer's responsibility to ensure they have all the tax forms and that they are correct (as far as they can tell). Don't you do a cursory comparison between the dividends, interest, capital gains they receive each year and what the tax forms report? Then if the tax forms are wrong, you can notify the custodian (or correct your misunderstanding).
I do check sales, but as for capital gain distributions, dividends, interest -- absolutely NOT, except for the limited purpose of figuring out foreign tax credit.

After all why stop there ? I could go back and check not just transactions reported on my statements, but also all reporting and calculate if the amount of interest was properly computed. And for MFs, check the dividends actually paid by the companies held by the fund, and verifying that all were passed through. And so on ..

That way lies madness ...
I would agree. Is it possible to just wait until the IRS sends you one of those "you owe us more money" letters (assuming the updated 1099 results in this) and simply send a check then. I think that happened to me once years ago after my tax accountant (prior to doing my own taxes) screwed up one of my filings. it wasn't worth my time to do anything but just send the check in.

I've found many Bogleheads miss the lifestyle design element when it comes to money, overlooking the truism that your time is your money is your life. Perhaps it's because money, while theoretically unlimited, is tangible, while time, which is quite limited in this very short life, is intangible. In this way, many Bogleheads miss the forest (in the end, we're all dead), for the trees ( :moneybag ).

DetroitRick
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Re: Vanguard updated 1099 in August!

Post by DetroitRick » Mon Aug 13, 2018 12:04 pm

This is very common. I've had it happen with both stocks dividends and mutual funds distributions. Typically it's been a reclassification of a distribution or dividend already received. But out of all the times this has ever happened to me, an error was only evident in advance one time (and I called and got it fixed within a week). In all other cases, there was no way for me to know in advance. Typically it wouldn't be a reflection on the broker and it's not confined to any one.

Of course, a few years ago, Schwab starting breaking it's 1099 mailings into an early and a later group to mitigate this. The later group consists of 1099's involving funds that have tended to report have adjustments after year-end. But I've heard complaints there to - damned if you do, damned if you don't.

Frankly, I don't worry about it anymore. I wait until early April to file taxes, except this year when we had an identity theft issue and I filed in February. I've gotten these revised 1099's in February, March, and August (in my case from Schwab). Not a recommendation, but I will only file an amended return if I consider the tax difference to be material. And I have yet to ever get a contact or revision notice from the IRS (as I now jinx myself).
Last edited by DetroitRick on Mon Aug 13, 2018 12:06 pm, edited 1 time in total.

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FIREchief
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Re: Vanguard updated 1099 in August!

Post by FIREchief » Mon Aug 13, 2018 12:06 pm

Dale_G wrote:
Sun Aug 12, 2018 11:15 pm
So, I am on pins and needles - what was the name of the fund?

Dale
+1 I would like the hear this too.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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car733
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Re: Vanguard updated 1099 in August!

Post by car733 » Mon Aug 13, 2018 2:24 pm

livesoft wrote:
Sun Aug 12, 2018 8:45 pm
What's the rush to send in an Amended Return? There might be a correction to the correction.

We have not filed 2017 taxes yet. I'll get around to it in October.
What if you own money? You will end up with interest, right?

livesoft
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Re: Vanguard updated 1099 in August!

Post by livesoft » Mon Aug 13, 2018 2:29 pm

car733 wrote:
Mon Aug 13, 2018 2:24 pm
livesoft wrote:
Sun Aug 12, 2018 8:45 pm
What's the rush to send in an Amended Return? There might be a correction to the correction.

We have not filed 2017 taxes yet. I'll get around to it in October.
What if you own money? You will end up with interest, right?
When one files for an automatic extension one is supposed to pay what they might owe. So one should not have to owe money if they file in October because of what they did when they sent Form 4868 earlier in the year.
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