Your Tax Documents Should Be Arriving Soon

To ensure individuals properly report all their income, the IRS has an ever-expanding series of information-reporting forms used to advise you and the IRS of your wages, retirement plan income, Social Security benefits, health insurance premium subsidies, stock sales, investment income, etc., for each tax year. The issuers of most of these forms have until January 31, following the year to which they apply, to mail them to you or make them available to you online, so they should arrive in your hands soon after that. When applicable, these forms are sent to you and provided to the IRS and state taxing agencies. The IRS and states use them to verify that you are properly preparing your tax return(s). If you fail to account for the information correctly, you can expect to hear from the IRS or your state tax department in a year or so. Here is a rundown of the most frequently encountered of these documents:  

W-2 – A form almost everyone is familiar with. It includes the wages from your employer for the year, along with withholdings and other information that is crucial in preparing your return. You should receive a W-2 from each employer you had during the year.

1099-INT – The payers of interest income use this form to report the amount of interest you earned from various sources throughout the year. If the interest earned is less than $10, the payer may not issue the form, but the interest must still be included in your interest income. Note: If you paid foreign taxes on the interest income, that tax will be reported on the 1099-INT.

1099-DIV – This form reports the dividend income you earned from various sources throughout the year. If a brokerage firm is holding your stock portfolio, it may use a substitute form, which will likely include payments from all the types of 1099s that it needs to issue. Note: If you paid foreign taxes on the dividend income, that tax will be reported on the 1099-DIV.

1099-B – If you sold stocks during the year, you will receive a 1099-B form showing the gross sales proceeds from stock transactions. If you have a brokerage account, most brokers use a substitute form showing the details of all your sales for the year.

Special note about 1099s from brokers: Sometimes, a brokerage firm may receive a time extension from the IRS to file its 1099s because it needs information from certain mutual funds to complete the 1099s correctly. So, if you don’t receive your 1099s from your broker shortly after January 31, check with your broker for the anticipated date when the 1099s will be available. If you have an online account, you may be able to download and print the forms instead of waiting for them to arrive in the postal service mail. 

1099-S – If you sold your home during the year, you may receive a Form 1099-S showing the sales price. You may have received this form when the escrow closed rather than getting it in the mail after the end of the year. In either case, the closing escrow statement is also needed for the sales expenses and prorations.   

SSA-1099 – If you received Social Security income during 2023, you would receive a Form SSA-1099 (RRB-1099 for railroad retirement) reporting your benefits for the year and the amount of Medicare insurance paid. 

1099-R – If you received a pension or other retirement plan benefits, including IRA distributions, you will receive a 1099-R showing the year’s total amount and generally also the taxable portion, any tax that was withheld, and other information needed to prepare your tax return.                                                                                                                                                                                 

1098 – If you have a home loan, the lender will provide a Form 1098 showing the interest you paid for the year.

1098-C – Form 1098-C provides the information needed to determine the amount of a charitable contribution allowed for a motor vehicle, boat, or airplane donated to charity. 

1098-E – Form 1098-E shows the student loan interest you paid during the year. 

1098-MA – If you received assistance with your home mortgage payments, you will receive this form; it helps determine how much mortgage interest you paid and the amount you deducted.

1098-T – If you paid college tuition for yourself, your spouse, or a dependent, the educational institution will send you this form, which shows the tuition you paid throughout the year and other amounts that could affect the computation of the higher-education tax credits.

1095-A – If you obtain health insurance through a government marketplace, you will receive Form 1095-A. This form is needed to compute your premium tax credit and reconcile any advance credit used to subsidize your premiums. In some cases, you may need to log into your marketplace account and download the form. 

1099-C – If a lender forgives all or a portion of a debt, this form includes a variety of information needed to determine what portion of the debt is taxable and the part, if any, that is excludable from income. 

1099-NEC – If you were self-employed in 2023, businesses that paid you $600 or more will issue you a 1099-NEC. Some companies may issue a 1099-NEC even if they paid you less than $600. 

1099-MISC – Used for reporting miscellaneous information for each person in the course of their business to whom they have paid the following during the year: At least $10 in royalties, and at least $600 in rents, prizes, and awards, fishing boat proceeds, medical and health care payments, crop insurance proceeds, gross proceeds paid to an attorney, or other miscellaneous information. Payments to independent contractors should be reported on the 1099-NEC rather than the 1099-MISC.

1099-K – If your business accepts credit cards, debit cards, PayPal, or other third-party payments, you may receive a 1099-K showing those sales for the year, depending on the number and total dollar amount of transactions. The threshold for issuing a 1099-K in 2024 for 2023 is to taxpayers who received over $20,000 and had over 200 transactions. For tax year 2024, the IRS plans for a threshold of $5,000 to phase in lower reporting requirements. There is a possibility that some taxpayers may receive a 1099-K reporting income that is not taxable because it wasn’t the result of business activity or that had also been included in Form 1099-NEC. Check with the office if you are uncertain about the taxability of what’s reported on a 1099-K you receive.

K-1 – If you are a partner in a partnership, a shareholder in an S-corporation, or a trust beneficiary, you will receive a K-1 showing your income, loss, deductions, credits, or other information from the entity needed to prepare your return.  

It is essential to understand that the IRS and most states also receive a copy of these documents. If the information on these forms is incorrectly reported on your tax return, you will eventually hear from the government. Also, remember that even if you don’t receive the income-reporting 1099 you were expecting, you are still required to report the income you received from that payer or business on your tax return.

Please call this office if you have questions about these informational forms or others not included above.