I traded about 20 ETFs last year and have only received K-1s for two of them. Those documents just now arrived in the mail. How can I know which ones to expect a K-1 from, and why are they just starting to show up in April?
Typically, K-1s are issued by ETFs that trade in assets other than straight stocks and bonds, including, but not limited to: currency, commodities, leveraged indexes (i.e. triple return), although there may be some specific instances when even straight stock and bond ETFs are required to issue a K-1 rather than a 1099. You can find lists of ETFs that issue K-1s online, or you can contact the ETF itself.
Because K-1s have a March 15 date to be sent out.
AJ
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Thanks, AJ! Two more questions. If I bought a K-1 ETF in 2023, but haven’t sold it, should I expect a K-1 on that? Would it be better to only trade these within a retirement account to avoid this extra paperwork?
It’s possible. Did your account recognize any type of income from the ETF in 2023? If so, it should be documented, probably on a K-1
I do not recommend trading anything that generates a K-1 in a retirement account because of the possibility of generating UBTI (Unrelated Business Taxable Income), which can require your IRA (even a Roth IRA) to file it’s own tax return and pay taxes out of the IRA. Any taxes owed by the IRA would be at (higher) trust rates, not individual rates.
AJ
I’ll have to check for any income from the unsold ETFs. Thanks for letting me know that’s a possibility. Also very good to know that trading these inside a retirement account would not be a good idea. You are always a huge help!! I appreciate you!!
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Lisa were you trading Boil? LOL
Andy