One of the single most confusing tax forms is none other than FORM 5498. The issue is it arrives well after tax season (in the last week of May first week of June) causing much confusion. Part of the reason for the late arrival is the reporting of Qualified/IRA type of contributions and their respective delayed contribution date (recall IRA contributions can be made up to your filing date of your return.)

Form 5498 IS supposed to arrive AFTER tax season!

Most of the purpose of Form 5498 is to notify the recipient and of course the IRS of a deposit from a rollover, transfer or other tax qualified event, that would otherwise lead to a taxable situation. Think of it as a reconciliation for Uncle Sam.

Why am I getting a Form 5498?

Most likely the reason you as clients or others are receiving this confusing Form 5498 is due to a rollover from an old employer or other qualified plan. Think of it as a courtesy duplicate notification that is also sent to the IRS for information purposes.  There are a few other reasons, but this is the main.

Do I need to do anything with Form 5498?

Not really…. but we recommend you toss it into your rather empty (most likely the first document) current year tax file and keep it for good measure and deliver it to your tax professional next year with your other tax documents for the current year. If the IRS comes back to you for more information, it may be a handy defense document.

While there are MANY horror stories from Uncle Sam and the reporting of taxes, Form 5498 is your friend and a helpful defense…just confusingly late to the tax party!

Have a Great Monday!

John Kvale