How to prevent tax reporting to the wrong state

For tax purposes, the mailing address on the account on the last business day of the year will be reported as the account owner's residence to the Internal Revenue Service (IRS). This includes seasonal clientTooltip addresses.

If the account mailing address was incorrect as of December 31, Schwab cannot produce a corrected tax form or letter to the IRS reflecting a different mailing address unless the incorrect information was due to a Schwab error. Your client should work with the state tax authority or tax advisor for resolution.

How to prevent tax reporting to the wrong state

Schwab reports income on various tax forms to the IRS. The IRS generally forwards the reported income to the state Tooltip  listed on the account as of December 31. The following implications could result if the address is not updated and the income is reported to the wrong state:

  • The client may pay taxes on income not earned in a state where they permanently reside.
  • The client may not pay enough state tax if they moved from a lower tax jurisdiction to a higher tax jurisdiction or vice versa.
  • U.S. seasonal residents with a Puerto Rico address on December 31 may receive a Form 480.6A and/or Form 480.6B.
  • Name of clients with a seasonal address as of December 31
  • Address change information
  • Paperless delivery information
Additional Mailing Address Clients can add their seasonal address as an additional mailing address without changing their legal residence address.

Mail is sent to both locations and Schwab will report the Primary Mailing Address as the legal residence at year end.
Enroll in paperless delivery If the client is enrolled in paperless delivery, reports are not mailed, therefore no changes are made to the legal residence address and the client can access reports online.
Change the mailing address prior to December 31 Clients can revert to their Primary Mailing Address before December 31 and change to their seasonal mailing address again in the New Year.

If you have questions about cost basis, statement formatting preferences, and tax reporting, call your service team or Advisor Services Cost Basis Services Tooltip at 877-762-6446.

Which address will the tax form be mailed to?
The tax form will be sent to the mailing address on the client account(s) at the time the tax form is produced.

Is this information communicated to my client?
The information is disclosed to clients on an annual basis in an insert sent with their December statement.

How to update addresses using the address change tool