In the last couple of weeks, I’ve had multiple clients call in a panic because they received a Form 5498. For some reason, these forms seem to be coming late – one client got one right before Memorial Day.*
(*-After this post was published, an alert reader pointed out that, technically, issuers of Form 5498 have until May 31st to send the form out, so it’s not entirely fair of me to say the forms are “late” in arriving. Still, the receipt of a tax form in late May is jarring for most folks.)
The good news is, Form 5498 seldom directly affects the tax return, so in most cases you won’t need to amend or do anything with the form.
What is Form 5498?
There are several types of Form 5498, but they all report the same basic thing: contributions to various tax-advantaged accounts.
- Form 5498: this form (without any hyphens or abbreviations after the “5498”) reports contributions to IRAs, including traditional IRAs, Roth IRAs, and SIMPLE and SEP accounts.
- Form 5498-ESA: reports contributions to Coverdale savings accounts. Coverdale accounts are a type of tax-advantaged account for college expenses.
- Form 5498-SA: reports contributions to various medical savings accounts, such as HSAs.
What to do with a Form 5498
Form 5498 by itself doesn’t really affect your tax return. It’s one of those “behind the scenes” forms that you should keep with your tax records.
For example, if you put money into a traditional IRA in 2015, you can take a deduction for that contribution (assuming you meet the requirements for qualifying for the deduction). You file your tax return showing the IRA contribution.
Form 5498 — whenever it arrives — will show the amount of the contribution. It’s a type of proof that the IRA contribution was actually made.
So here’s what I recommend doing with a Form 5498 when it arrives:
- If it arrives during tax season and before your return has been prepared, give the form to your tax professional
- If it arrives after you’ve already filed your tax return, review the Form 5498 (or have your tax pro review) to see what it shows. Chances are, it will simply confirm information that’s already on the tax return. In that case, you don’t need to do anything; simply put the form with the rest of your tax files for that year.
- If there’s a discrepancy between the Form 5498 and what was reported on your tax return, you and your tax pro will need to dig a little deeper and see what the discrepancy is, and see if an amendment needs filed.