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, Feb. 8, 2023 – Tax season is officially underway, and taxpayers’ physical and digital mailboxes will soon—if they haven’t already—start filling with tax forms from their employers, banks and financial institutions, and elsewhere. With the IRS anticipating more than 168 million individual tax returns will be filed this season, getting a good start on prepping to complete 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. Wading through all the various forms with seemingly identical titles can be confusing, so here’s a breakdown of the most common forms you’re likely to receive:
W-2: One of the most common forms, Form W-2 is provided by employers annually to report a taxpayer’s total compensation, taxes paid, and contributions to retirement accounts, among other payroll details.
1098: Purchase a new property or continue paying a mortgage? 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 and insurance premiums, and other financial details.
1098-E: Taxpayers with federal student loans may or may not receive this form for 2022. Due to the COVID-19 student loan payment pause, many borrowers didn’t pay any interest or paid less than $600 in interest on their loans during 2022 and won’t get a 1098-E. 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 for reporting purposes.
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 from each applicable bank or financial institution.
1099-K: Income received through payment card and third-party network transactions—like sales via Cash App, eBay, and PayPal, among others—will be reported on this form. On Dec. 23, 2022, the IRS announced that calendar year 2022 will be treated as a transition year for the reduced reporting threshold of more than $600. For calendar year 2022, third-party settlement organizations who issue Forms 1099-K are only required to report transactions where gross payments exceed $20,000 and there are more than 200 transactions.
1099-MISC: Income earned from miscellaneous sources, like royalties, rents, prizes, or awards, will be 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.
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 amount of benefits received.
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 Tuesday, April 18, 2023, due to the traditional April 15 deadline falling during a weekend and because the following Monday is Emancipation Day in Washington, D.C. April 18 is also the deadline for requesting a filing extension, which gives taxpayers an additional six months to file their 2022 tax returns. Remember, however, an extension only provides additional time to file a return, and any anticipated tax payments are still due on April 18. 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.