Tax preparation guide for your Putnam accounts

Transcription

1 Tax preparation guide for your Putnam accounts 2015 Everything you need to know to transfer information from your Putnam tax statements to your IRS tax forms, plus other useful information. Your Putnam Tax Package may include one or more of the following: 1099-DIV 2015 Dividends and Distributions 1099-B 2015 Proceeds from Broker & Barter Exchange Transactions 1099-R 2015 Distributions from Pensions, Annuities, Retirement or Profit- Sharing Plans, IRAs, Insurance Contracts, etc Q 2015 Payments from Qualified Education Programs (under sections 529 and 530) IRA Contribution Information 598-ESA 2015 Coverdell ESA Contribution Information SH /15 1

2 Useful tax information and resources 2015 CONTRIBUTION DEADLINES AND LIMITS Type of account Contribution deadline Contribution limit Limit including age 50 catch-up contribution Traditional IRA April 18, 2016 $5,500 $6,500 Roth IRA April 18, 2016 $5,500 $6,500 SEP IRA N/A* Call Putnam for employer limits Call Putnam for employer limits SIMPLE IRA N/A* $12,500 $15,500 Coverdell ESA April 18, 2016 $2,000 N/A 1In accordance with applicable regulations, Putnam reports all contributions received from January 1 through December 31 as current-year contributions, regardless of whether they were intended to be prior-year contributions. IMPORTANT RESOURCES Online information Your Putnam tax forms and other useful tax information are available online at putnam.com. If you do not have a password, call Putnam at to obtain one. Putnam s website, including the online Tax Center, will provide important information you need to complete your taxes, including: Putnam tax forms and IRS Schedule D information that you can download and print Mutual fund information (including the funds that paid taxable dividends and capital gains), your cost basis information, and answers to frequently asked questions IRS publications History of your Putnam accounts, including your quarterly statements Fund prospectuses and shareholder reports Assistance by telephone If you need additional assistance, call directly at, Monday through Friday, 8:00 a.m. 8:00 p.m. Eastern Time. For Internal Revenue Service taxpayer assistance, call TAX-100 or visit the IRS website at irs.gov. 2

3 The following illustrations will help you transfer information from your Putnam tax statements to your IRS tax forms DIV This form reports the following: dividend distributions, taxable dividends, exempt interest dividends, and qualified dividends. It will also report any capital gain distributions, non-dividend distributions, federal income tax, foreign tax paid, and specified private bond activity. Please consult your tax advisor or state tax authority regarding the state tax treatment of dividends, including income from U.S. Treasury obligations DIV 2015 Dividends & Distributions Copy B for Recipient (OMB No ) This is important tax information and is being furnished to the Internal Revenue Service (except as indicated). If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported. Name of Fund (Payer), Fund Tax I.D. Number and Account Number Recipient s tax identification number 1a Total Ordinary Dividends 1b Qualified Dividends 2a Total Capital Gain Distributions 3 Nondividend Distributions Federal Income Tax Withheld 6 Foreign Tax Paid 10 Exemptinterest dividends 11 Specified private activity bond interest dividends A 1a 1b 2a State 13 State Identification no. 1 State Tax Withheld IRS FORM 100 1a Enter on Line 9a: Ordinary dividends Attach Schedule B (if required) 1b Enter on Line 9b: Qualified dividends IRS FORM 100A 1a Enter on Line 9a: This is important tax information and should be kept for future reference. See instructions on the back of this form. Ordinary dividends Attach Schedule B (if required) 1b Enter on Line 9b: Qualified dividends 2a Enter on Line 13: Capital gain or (loss) Attach Schedule D (if required) 2a Enter on Line 10: Capital gain distributions (if applicable) Enter on Line 6: Federal income tax withheld Enter on Line 0: Federal income tax withheld 6 Enter on Line 0: 6 Enter on Line 8: For deduction: Itemized deductions Attach Schedule A; or For credit: Foreign tax credit Attach Form 1116 (if required) IRS SCHEDULE B (100A) A Enter on Line 5: List payer (fund) name 1a Enter on Line 5: Total ordinary dividends 10 Enter on Line 8b: Tax-exempt interest 11 Complete Form 6251 (if applicable) in order to complete Line 5 IRS SCHEDULE A (100) 6 Enter on Line 8: Other taxes IRS SCHEDULE B (100) A Enter on Line 5: List payer (fund) name 1a Enter on Line 5: Total ordinary dividends IRS SCHEDULE D (100) 1b Complete Line 22: Qualified dividends 2a Enter on Line 13: 3 Complete Part I: 3 Complete Part II: Gain or (loss) Capital gain distributions Short-term Use IRS Publication 550 to determine this information (if required) Long-term Use IRS Publication 550 to determine this information (if required) 3

4 1099-B 1099-R This form reports proceeds from sales of shares in non- retirement accounts (excluding money market fund accounts). It also reports your cost basis information for all redemptions and exchanges from your accounts. The information on this form is reported to the Internal Revenue Service, except as indicated R 1099-B 2015 Proceeds From Broker & Barter Exchange Transactions Copy B for Recipient (OMB No ) This is important tax information and is being furnished to the Internal Revenue Service (except as indicated). If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported. Name of Fund (Payer), Fund Tax I.D. Number, Account Number and CUSIP Number Recipient s tax identification number 1a Description 1b Date Acquired 1c Date of Sale or Exchange 1d Proceeds 1e Cost or other basis 1f/1g Wash Sale Adjustment Federal Income Tax Withheld Gain (Loss)* 1 State 15 State Identification No. 16 State Tax Withheld This form reports distributions from your Putnam retirement accounts. The information on this form is reported to the IRS Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. This information is being furnished to the Internal Revenue Service (IRS). Recipient s tax identification number Payer Name, Payer Tax I.D. Number and Account Number 1 Gross Distribution 2a Taxable Amount 1 2a* Copy C for Recipient s Records (OMB No ) 2b Taxable Amount Not Determined 2b Total Distribution Federal Income Tax Withheld 7 Distribution Code(s) IRA/ SEP/ SIMPLE 12 State Tax Withheld 13 State/Payer s State No. 1a 1b 1c 1d 1e 1f 1g IRS FORM Enter on Line 15a: IRA distributions IRS FORM 100 Enter on Line 6: This is important tax information and should be kept for future reference. See instructions on the back of this form. IRS FORM 100A Enter on Line 0: FORM 899 Part I Short-Term: Federal income tax withheld Federal income tax withheld 1a Enter on Line 1, Column (a): Description of property 1 Enter on Line 16a: Pensions and annuities This is important tax information and should be kept for future reference. See instructions on the back of this form. 2a Enter on Line 15b: 2a Enter on Line 16b: IRA distributions: Taxable amount* Pensions and annuities: Taxable amount* Enter on Line 6: Federal income tax withheld IRS FORM 100A 1 Enter on Line 11a: IRA distributions 1b Enter on Line 1, Column (b): Date acquired 1c Enter on Line 1, Column (c): Date sold or disposed 1d Enter on Line 1, Column (d): Proceeds 1e Enter on Line 1, Column (e): Cost or other basis 1f 1g Enter on Line 1, Column (f)(g): Wash sale adjustment Part II Long-Term: 1a Enter on Line 2, Column (a): Description of property 1 Enter on Line 12a: Pensions and annuities 2a Enter on Line 11b: 2a Enter on Line 12b: IRA distributions: Taxable amount* Pensions and annuities: Taxable amount* Enter on Line 0: Federal income tax withheld 1 If no dollar amount is listed in column 2a, refer to IRS Publication 575 or 590 to determine if you have a taxable amount. 2 If there is a dollar amount listed in column, you must attach copy B of your 1099-R to your income tax return. 1b Enter on Line 2, Column (b): Date acquired 1c Enter on Line 2, Column (c): Date sold or disposed 1d Enter on Line 2, Column (d): Proceeds 1e Enter on Line 2, Column (e): Cost or other basis 1f 1g Enter on Line 2, Column (f)(g): Wash sale adjustment 1Gain (loss) information is not reported to the IRS.

5 1099-Q This form reports distributions from Coverdell ESAs. The information on this form is reported to the IRS. Copy B for Recipient (OMB No ) 1099-Q 2015 Payments From Qualified Education Programs (Under Sections 529 and 530) This is important tax information and is being furnished to the Internal Revenue Service (IRS). If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported. Recipient s tax identification number 598 This form reports Traditional, Roth, SEP, and SIMPLE IRA contributions, rollovers, recharacterizations, conversions, and fair market value as of December 31. The information on this form is reported to the IRS IRA Contribution Information Copy B for Participant (OMB No ) This information is being furnished to the Internal Revenue Service (IRS). This form represents your 2015 Form 598 contributions as of 12/31/2015. If additional investments and/or adjustments are made to your account, an updated 2015 Form 598 will be mailed to you by May 31, Qualified Tuition Program (Payer), Fund Tax I.D. Number and Account Number of the Payer 1 Gross Distribution 2 Earnings 3 Basis Trustee-To- Trustee Transfer 5 Qualified Tuition Program Private or State 6 Checked if Recipient is not the Designated Beneficiary Participant s tax identification number 1 2 Payer Name, Payer Tax I.D. Number and Account Number 1 IRA Contribution (other than amounts in columns 2- and 8-10) 2 Rollover 3 Roth IRA Conversion Amount Recharacterized 5 Fair Market Value on 12/31/ IRA/ SEP/ SIMPLE/ Roth IRA 8 SEP 9 SIMPLE 10 Roth IRA Required Min. Dist.(RMD) IRS FORM Enter on Line 21: 598-ESA 2015 Coverdell ESA Contribution Information Copy B for Beneficiary (OMB No ) The information in Columns 1 and 2 is being furnished to the Internal Revenue Service (IRS). This form represents your 2015 Form 598-ESA contributions as of 12/31/2015. If additional investments and/or adjustments are made to your account an updated 2015 Form 598-ESA will be mailed to you by May 2, Other income. Refer to IRS Form 100 instructions and Publication For earnings and basis, refer to IRS Publication ESA This form reports contributions and rollovers to Coverdell ESAs. The information on this form is reported to the IRS. IRS FORMS 100 AND 100A 1 Enter on Line 32: This is important tax information and should be kept for future reference. See instructions on the back of this form. 1 Enter on Line 17: IRA deduction. Refer to IRS Form 100 instructions IRA deduction. Refer to Form 100A instructions For rollover contributions, refer to IRS Form 100 or 100A instructions For Roth IRA conversion amounts, refer to IRS Form 100 or 100A instructions and Form 8606 For recharacterized contributions, refer to IRS Forms 100 and 100A instructions and Publication 590 If your employer made these contributions, they are not deductible. Refer to IRS Publication Not deductible Refer to IRS Publication Beneficiary s tax identification number Name of Fund (Payer) and Account Number Fund (Payer) Tax I.D. Number 1 Coverdell ESA 2 Rollover Form 598 reflects account activity as of December 31, If you make additional investments and/or adjustments, an updated form will be mailed to you by May 31, This important tax information should be kept for future reference. See instructions on the back of this form. to Coverdell 598-ESAs are not deductible. See IRS Publication 970 for details. Form 598-ESA reflects account activity as of December 31, If you make additional investments and/or adjustments, an updated form will be mailed to you by May 2,

6 Frequently asked questions 1099-DIV What is Specified Private Activity Bond Interest? If you are subject to the Alternative Minimum Tax (AMT), then this amount needs to be reported as a tax preference item on Form If the fund invests in certain private activity bonds, then the income subject to the AMT will be shown on Form 1099-DIV. Why did I receive Form 1099-DIV if my dividends were reinvested and I never received any cash? The IRS requires us to report any income distributions paid to you by the funds even if you reinvest them in your account. What are qualified dividends? Qualified dividends are those received by an individual shareholder from domestic or qualified foreign corporations that may be eligible (depending on the holding period, etc.) to be taxed at the reduced capital gains tax rates. Review IRS Publication 550 or consult with your tax advisor for more information on qualified dividends. Why doesn t my Form 1099-DIV match my annual statement? Putnam determines each fund s taxable income and capital gains after mailing your annual statement. At year-end, it is sometimes necessary for Putnam to adjust a fund s distributions to properly reflect the fund s actual taxable income and capital gain for the year. This process is known as reallocation. If a reallocation occurred on a fund in which you have an investment, the information provided on your annual statement and your Form 1099-DIV will differ. For tax purposes, you should use your tax forms and not your annual statement R Are dividends and capital gains reported on Form 1099-R? No, not if they were reinvested in the fund. However, if you elected to receive these distributions in cash, they will be reported on Form 1099-R. Why was money withheld from my retirement account redemption? The following situations require Putnam to withhold and prepay federal income taxes and should not be confused with any IRS penalties: a. You did not provide withholding instructions at the time of the distribution, and 10% was withheld from your distribution as required by the Internal Revenue Service (IRS) b. You received a distribution payable directly to you (also known as an eligible rollover distribution ) Why was state withholding taken from my redemption? Some states require withholding from retirement distributions if federal withholding is required on those distributions. If state withholding was taken from your redemption, your address of record indicated you lived in a state with this requirement. For more details, visit the Tax Center at putnam.com. Why does my Form 1099-R show more than one distribution code for my distribution transaction? Certain distribution transactions require more than one distribution code to accurately identify the type of distribution you received. See the distribution code(s) listed for Column 7 on the back of your Form 1099-R to identify payment code descriptions. How will I know if a required minimum distribution (RMD) is necessary from my Traditional IRA? If our records indicate that it is necessary for you to take a required minimum distribution from your Traditional IRA in 2016, your Form 598 will reflect that. What is the difference between a Traditional IRA and a Roth IRA? to a Traditional IRA are generally tax deductible, unless certain income limitations are exceeded by the taxpayer. Distributions from a Traditional IRA are generally taxed as ordinary income. to a Roth IRA are not tax deductible. However, distributions from a Roth IRA are tax free as long as you meet certain requirements (see Publication 590 for a complete list). 6

7 1099-Q Are distributions from a Coverdell ESA tax free? Yes, as long as they are used to pay for qualified educational expenses, do not exceed the amount of those expenses, and are made in the same year the expenses are incurred. What is the difference between qualified and nonqualified distributions? Qualified distributions are used for educational expenses such as tuition, room and board, etc. Nonqualified distributions are generally distributions that are not being used to cover educational expenses. When must distributions from a Coverdell ESA be completed? The remaining balance in the account will need to be distributed to the designated beneficiary within 30 days after his/her 30th birthday, or it can be rolled over to another Coverdell ESA for the benefit of a family member of the designated beneficiary. There are certain exceptions for special-needs beneficiaries. Refer to IRS Publication 970 for additional information. 598-ESA Are contributions to a Coverdell ESA deductible? to a Coverdell ESA are not deductible; however, earnings accumulate tax free and qualified withdrawals are nontaxable. Can I also fund a Coverdell ESA if I currently have a 529 account? Yes, the law permits contributions to both a Coverdell ESA and a 529 for the same beneficiary. However, there are income limits for contributing to a Coverdell ESA. What are the benefits of opening a Coverdell ESA Account? It gives you the opportunity to contribute up to $2,000 per child per year to save for qualified education expenses; it allows you to make contributions until April 18, 2016, for tax year 2015; it allows you to make tax-free withdrawals as long as the money is used for qualified educational expenses; and it allows you to transfer the account to another family member without penalties or taxes B Why did I receive a Form 1099-B when I only exchanged shares? An exchange of shares is generally considered a taxable event. An exchange is treated as a sell transaction in which shares are sold from the original fund and purchased in the receiving fund(s). Why aren t redemptions or exchanges from money market funds reported? There is no gain or loss to report on these funds because the net asset value (NAV) generally remains at $1.00 per share. Cost-Basis Reporting The Emergency Economic Stabilization Act, which was signed into law on October 3, 2008, requires mutual fund companies to report adjusted cost-basis to the Internal Revenue Service and taxpayers on the sale of fund shares acquired on or after January 1, The new reporting requirements only apply to taxable accounts. This information will be reported to you on IRS Form 1099-B. The legislation also requires that Form 1099-B characterize the gain or loss as short term or long term, and report the amount of any loss disallowed under the wash sale rules. The following are responses to some frequently asked questions that you may find helpful as you review your tax forms. What kinds of accounts will be subject to mandatory cost-basis reporting? All non-retirement accounts that are subject to 1099-B reporting are subject to mandatory cost-basis reporting. This includes the following types of accounts: Individual accounts Joint accounts Uniform Gift/Transfers to Minors accounts Partnership accounts Trust accounts S Corporation accounts What are covered securities? Covered mutual fund shares are those acquired on or after January 1, This includes shares purchased through the reinvestment of dividend and capital gain distributions. What are non-covered securities? Non-covered securities refer to shares purchased or acquired prior to January 1, It is also possible for shares purchased after January 1, 2012, to be designated as non-covered shares. For example, if shares were transferred to you and the originating broker did not supply the necessary information to calculate costbasis, those shares would be non-covered. 7

8 Frequently asked questions (continued) What cost-basis accounting methods are available? The following cost-basis accounting methods are available to you: Average Cost This is the common accounting method for valuing the cost of shares in a mutual fund account by averaging the effect of all transactions in the account. The cost per share is determined by dividing the aggregate cost amount by the total shares in the account. The basis of the shares redeemed is determined by multiplying the shares redeemed by the calculated average cost per share. First In, First Out (FIFO) Shares acquired first in the shareholder s account are the first shares depleted to determine the shareholder s cost basis, gain or loss, and holding period. Last In, First Out (LIFO) Shares acquired last in the shareholder s account are the first shares depleted to determine the shareholder s cost basis, gain or loss, and holding period. High Cost, First Out (HIFO) Shares with the highest cost per share are the first shares depleted to determine the shareholder s cost basis, gain or loss, and holding period. Low Cost, First Out (LOFO) Shares with the lowest cost per share are the first shares depleted to determine the shareholder s cost basis, gain or loss, and holding period. Loss/Gain Utilization (LGUT) Evaluates losses and gains and strategically selects shares to deplete based on the loss/gain in conjunction with the holding period. The loss/gain utilization election method depletes shares with losses before shares with gains, consistent with the objective of minimizing taxes. For share lots that yield a loss, short-term share lots will be redeemed ahead of long-term share lots. For gains, long-term share lots will be redeemed ahead of short-term share lots. Specific Lot Identification (SLID) Allows the shareholder to choose the specific share lots that will be depleted when redeeming shares. A secondary standing order will be used for any redemption(s) where the shareholder cannot or does not provide a specific share lot selection. What happens if I don t select a cost-basis accounting method? The legislation allows shareholders to select a cost-basis accounting method but also requires mutual funds to establish a default method for those shareholders who have not made an election. The Putnam funds have selected Average Cost as the default calculation method. Am I able to change my cost-basis election? If you have not selected a reporting method and we have applied Average Cost as the default, you may elect another method retroactively provided you make the election prior to the date of your first redemption or transfer. Please note that your election must be made either in writing or online. Changes to the reporting method that are received after the date of your first redemption may only be applied prospectively. How will my gain/loss be reported? You will receive a Form 1099-B showing sales proceeds for each sale transaction. Basis information will be reported to you along with the calculated gain or loss on each trade. The gain or loss will be classified on the form as either short term or long term based on the date of purchase. The information reported to you will also be reported to the IRS, if the shares are covered. Basis and gain/loss information for non-covered shares will not be reported to the IRS. What is a wash sale? A wash sale occurs when you sell an investment at a loss, and repurchase a substantially identical investment within a 61-day period that extends from 30 days before you take your loss until 30 days after. Losses resulting from wash sales are not deductible. Instead, the loss is added to the cost basis of the repurchased investment. Any wash sale for covered shares will be reported to the IRS and you on Form 1099-B. Access your Putnam tax forms and other useful tax information online at putnam.com. If you do not have a password, call Putnam at to obtain one. Putnam Investments One Post Office Square Boston, MA putnam.com 8