Tax reporting

Overview

During the customer on boarding process, DriveWealth utilizes the information sent through the create user request to generate either a W9, or W-8BEN tax form. As part of the DriveWealth customer agreement that the customer acknowledges under penalty of perjury that the information that they provided for W8 or W9 purposes is accurate.

Upon successful account creation DriveWealth will generate a W9 (US) or W-8BEN (non-US) tax form.Tax Certifications (W9 or W-8) are available for each established account. The form can be retrieved with a query of List All Physical Documents for a User.

How does a customer/partner retrieve a tax document?

When a Customer (end client) wants to retrieve a tax document: The partner can use the following API to list all Tax documents:

https://developer.drivewealth.com/reference/list-all-tax-documents

• Pass in the accountID and date range; this will display all tax documents within the given range (tax docs will be dated dec 31)

https://developer.drivewealth.com/reference/get-statement-file

• API returns a list of fields
• End customer decides which documents they want to view
• Partner makes a request with the proper fileID and is given a secureURL
• Partner serves up that URL for the end customer

The tax-form-created Amazon SQS Event eliminates the need for steps 1-3 as it pushes the fileIDs to the Partner. Partners can store the IDs in a DB to have them ready for steps 4 and 5.

https://developer.drivewealth.com/reference/tax-form-created

End of year processing

All tax forms are calculated based upon the US tax season which generally includes income received between January 1st, and December 31st. No exceptions are made to this Internal Revenue Service (IRS) procedure, and DriveWealth will not calculate returns based upon any other jurisdictional timeframe.
Generally before the end of February, all tax forms are submitted by DriveWealth to the IRS for processing and acceptance. The day in which end of year forms (highlighted below) are made available to end customers varies each year:

• 1099-R forms are made available on or by January 31st
• 1099-Consolidated forms are made available on or by February 15th
• 1042-S forms are made available on or by March 15th
• 5498 forms are made available on or by May 31st

*Dates above reflect the IRS tax form issue by date and if that date falls on a Saturday, Sunday, or legal U.S. holiday, the IRS deadline is moved to the next business day.

What the form(s) include and eligibility

It's important to note that Not all customer accounts receive an end of year tax form. To understand if a customer qualifies for a tax form generation they must meet the following threshold by form type:

• Form 1099-R

  • Form is used to report distributions from IRAs or if there was withholding on the account.

• Form 1099-Consolidated (1099-B, 1099-DIV, 1099-INT, and 1099-MISC)

• Sub form 1099-B

  • Form is used to report proceeds from broker and barter exchange transactions if there are sales or redemptions of $0.01 or more, or federal withholding on the sales proceeds.

• Sub form 1099-DIV

  • Form is used to report dividends and distributions of $10 or more (such as dividends, capital gains, or nontaxable distributions that were paid in stock or cash), $600 or more for liquidation distributions, or federal withholding taxes applied to the dividends.

• Sub form 1099-INT

  • Form is used to report interest income (including tax-exempt interest) of $10 or more in client accounts or federal withholding taxes applied to the interest.

• Sub form 1099-MISC

  • Form is used to report royalties and substitute dividends or interest of $10 or more in client accounts or federal withholding taxes applied to the income. Other income of $600 or more.

• Form 1042-S (nonresident aliens and non-US entities)

  • Form is used to report certain US sourced income received by nonresident aliens or non-US entities and federal tax withholding. It does not include account trading activity. US sourced/reportable payment generally includes dividends and interest, and income subject to withholding.

• Form 5498 (IRA contributions)

  • Form is used to report IRA contribution information if there are individual or rollover contributions to Traditional or Roth IRA accounts. It’s not required for filing taxes.

Tax Services

DriveWealth does not provide personal tax services for filing individuals personal tax returns. Any applicable tax planning and fillings pertaining to realized gain or loss, should be handled by the customer or their respective Tax Professional. Taxes will be withheld from dividends, capital distributions, and any further taxable events subject to US Tax Treaty Rates for W-8BEN customers. Backup withholding (“TEFRA” tax) may be applied in the event of an IRS B-Notice for any Name/TIN mismatches for customer accounts.

DriveWealth will not provide tax advice of any kind. Any tax advice must be obtained from a Tax Professional. DriveWealth will supply amended tax documents in the event of reportable changes, as well as support any questions as to the generation of the document(s).

Form determination

The country in which the customer will file her taxes is determined by the country field within Basic Information document object as exampled below.

{
  "userType": "INDIVIDUAL_TRADER",
  "parentIBID": "70b08fb4-488f-40ee-861d-482ce05efbdc",
  "wlpID": "DW",
  "documents": [{
	"type": "BASIC_INFO",
	"data": {
  	"firstName": "Veronica",
  	"lastName": "Mars",
  	"country": "USA",
  	"phone": "2125551234",
  	"emailAddress": "[email protected]",
  	"language": "en_US"
}

W-8BEN information updates

The IRS requires that a customer updates their W-8BEN every 3 years, after the date of account creation. To facilitate the change in information, DriveWealth makes available two methods:

• A hosted website: https://client.drivewealth.com/login
• User update endpoints.

The primary points of information that need to be either confirmed or changed include:

• Full Legal Name
• Address
• Tax Identification Number

IRA tax processing

Both ROTH and TRADITIONAL Individual Retirement Accounts (IRA's) receive a 1099-R and 5498 during tax season that covers:

• Distributions (1099-R)
• Contributions (5498)

These forms are not made available to the customer electronically, when available they are mailed to the address provided by the customer during the onboarding process.