Your Tax Documents Should Be Arriving Soon

Article Highlights:

• Information Reporting
• IRS Matching
• List of Documents

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 thereafter. These forms are not only sent to you but are also provided to the IRS and state taxing agencies, when applicable. The IRS and states use them to verify that you are properly preparing your tax return(s). If you fail to correctly account for the information, you can expect to hear from the IRS or your state tax department in a year or so. Here is a rundown on 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 – This form is used by the payers of interest income 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 is used to report 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 proceeds of sales 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: In some cases, a brokerage firm may receive a time extension from the IRS to file its 1099s because it needs information from certain mutual funds to properly complete the 1099s. So, if you don’t receive your 1099s from your broker shortly after Jan. 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 year’s end. 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 will be receiving 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 you with a Form 1098 showing the amount of interest paid on the loan for the year.

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

1098-E – Form 1098-E shows the amount of 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 is helpful for determining how much of the home mortgage interest you paid and the amount deductible by you.

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

1095-A – If you obtained your health insurance through a government marketplace, you will receive a Form 1095-A, which is needed to compute your premium tax credit and reconcile any advance credit that was 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 be issuing you a 1099-NEC. Some businesses may issue a 1099-NEC even if the amount they paid you was 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 a 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 beneficiary of a trust, you will receive a K-1 from the entity showing your income, loss, deductions, credits or other information from the entity needed to prepare your return.  

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

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