The Illinois CPA Society suggests making a checklist of the tax forms you’re likely to receive and need to file for a flawless tax season.
CHICAGO, Jan. 29, 2024 – Tax season is officially underway, and taxpayers’ mailboxes (and inboxes) will soon—if they haven’t already—start filling up with tax forms from their employers, banks, financial institutions, and elsewhere. With the IRS anticipating more than 128 million individual tax returns will be filed this season, getting off to a good head start on preparing yours is a smart way to avoid filing mistakes and processing delays.
Before filing your federal and state tax returns, make a checklist of the forms you must compile and file. Every taxpayer’s situation is different depending on where they earn taxable income from, so here’s a breakdown of the most common forms received:
W-2: Form W-2 is one of the most common forms, as it’s provided by employers annually to report a taxpayer’s total compensation, taxes paid, and contributions to retirement accounts, among other payroll deductions and details.
1098: Did you purchase a new property or continue paying an existing mortgage in 2023? Form 1098 is the mortgage interest statement provided by each lender for each mortgage a taxpayer is named on, reporting how much was paid in interest, insurance premiums, and other financial details.
1098-E: Taxpayers with federal student loans will likely see this one since interest began accruing on these loans once again in 2023. Generally, Form 1098-E reports federal student loan interest paid by borrowers equal to or greater than $600.
1098-T: Taxpayers who received payments for qualified tuition and expenses, certain adjustments, scholarships, or grants will receive Form 1098-T from their educational institution.
1099-B: Taxpayers with proceeds from broker or barter transactions, like selling stocks or options, or exchanging property, will receive Form 1098-B from each applicable financial institution to report any capital gains or losses.
1099-DIV: Each bank or financial institution in which a taxpayer receives dividends or other distributions from their investments during the calendar year will receive Form 1099-DIV to report the income.
1099-INT: Interest earned above $10 will be reported on Form 1099-INT for each interest-bearing account from each applicable bank or financial institution.
1099-K: Income received through payment card and third-party network transactions—like business sales via Cash App, eBay, and PayPal, among others—will be reported on this form. The IRS has once again delayed the lower reporting threshold of $600, so it’s likely for tax year 2023 that third-party settlement organizations who issue Forms 1099-K will only do so when gross payments exceed $20,000 or more than 200 transactions.
1099-MISC: Income earned from miscellaneous sources, like royalties, rents, prizes, or awards, are reported on Form 1099-MISC.
1099-R: If a taxpayer received a distribution of $10 or more from a pension, annuity, retirement account, profit-sharing plan, or insurance contract, Form 1099-R will be received from each applicable financial institution to report this income.
Schedule K-1: Three groups of taxpayers typically receive a K-1: business owners, co-owners, and partners; shareholders and investors; and those receiving income or assets from a trust or estate. Essentially, a K-1 reports the amounts (income, losses, etc.) that are passed through to each party that has an interest in certain entities (i.e., business partnerships, LLCs that have at least two partners or elect to be taxed as corporations, S corporations, and trusts and estates) that must be reported on their own tax returns.
SSA-1099 or SSA-1042S: For taxpayers receiving Social Security benefits, either Form SSA-1099 or Form SSA-1042S will be provided by the Social Security Administration to report the total benefits received.
Savvy taxpayers should make a list of the forms they expect to receive to ensure they’re all accounted for before filing their tax returns. Most tax forms will be delivered from January through February, and it’s always smart to check each form for any errors or inconsistencies before filing.
The deadline for filing individual tax returns is April 15, 2024, which is also the deadline for requesting a six-month filing extension. Remember, however, an extension only provides additional time to file a return, and any anticipated tax payments are still due on April 15. The IRS is also urging taxpayers to electronically file their tax returns and to choose direct deposit for receiving any refunds to speed up processing and enhance security.
Filing federal and state tax returns is a hectic and sometimes complicated process. The Illinois CPA Society reminds taxpayers that CPAs, certified public accountants, are ready to help. The Illinois CPA Society’s free “Find a CPA” directory can help you find the trusted, strategic advisor that’s right for you based on location, types of services needed, and languages spoken. Find your CPA at www.icpas.org/findacpa.