Don't Mess With Taxes

The tax filing season every year starts with a rush of flings. Last year, the Internal Revenue Service received more than 18 million returns (that's almost 12 percent of all the returns filed in 2018) during the first week the filings were accepted.

This year appears to be on a similar track. Through mid-day Monday, Jan. 28, the opening day of the 2019 filing season, the IRS says it received several million tax returns.

Those early filers obviously are expecting a tax refund. They also had all the documentation they needed to file their returns.

Some of us, however, no matter how much we want to file our new Form 1040, can't.

We are waiting for some necessary documents with the information we need to fill out our tax returns.

Jan. 31 deadline: Technically, it's still a bit early for the forms.

Employers and other businesses that issue wage and/or independent contractor earnings statements don't have to get the statement en route to workers until Jan. 31. That's this coming Thursday.

The IRS admits that the 35-day federal government shutdown did slow down the process for companies that in late December ordered paper information and employer returns from the tax agency.

These affected employers can file for an extension to get the earnings information to workers.

However, the IRS strongly suggests that these employers consider an alternate source for these forms. Or send them electronically.

Myriad forms to be on the lookout for: Meanwhile, for those of use awaiting the necessary tax filing statements, my best advice is to keep an eye on your snail and email boxes.

Here's a listing of some of the more popular tax information documents that will be filling both those mail receptacles in the next few days. A few don't have to be sent until later and those deadlines are noted in the descriptions of the statements.

W-2 — This is the tax form that most folks anxiously await. It's the statement from your employer (or employers, if you hold more than one job) that details how much money you made, how much income tax was withheld, the amounts taken out for Social Security and Medicare, and contributions to workplace benefit programs, such as 401(k) and similar retirement plans, medical accounts and child care reimbursement plans.

W-2G — If you're lucky, you'll get this earnings statement. It's specially designed to reported gambling winnings. It's sent to winners who get:

• $1,200 or more from bingo or slot machines,
• $1,500 or more in winnings (reduced by the wager) from keno,
• More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament,
• $600 or more in gambling winnings (except winnings previously noted) and the payout is at least 300 times the amount of the wager, and
• Any other gambling winnings subject to federal income tax withholding.

1095 form series reporting Affordable Care Act data — The reporting requirements for the health care law popularly known as Obamacare are still in effect for the 2018 tax year. That means you could get at least one of these three insurance coverage information documents:

• Form 1095-A, the Health Insurance Marketplace Statement, debuted for the 2015 tax year. Per its name, it is sent by the exchanges where individuals purchased their medical coverage.
• Form 1095-B is issued by health care insurance issuers or some smaller companies that provide coverage for employees. It confirms that you had workplace-provided healthcare that met the ACA's acceptable minimal health insurance coverage standard. It also shows how long you were covered and which family members also were on your policy.
• Form 1095-C is the same as B, but is issued by large employers.

1098 — This form lists how much mortgage interest a homeowner paid on the loan. In most cases, this amount is fully deductible. The IRS has an official 1098 form (that's what the 1098 link will show you), but most lenders tend to use a substitute document that contains the same data. They also include another key itemized tax deduction, the amount of real estate taxes on the property that the mortgage lender paid on your behalf the previous tax year. Note that under the new Tax Cuts and Jobs Act (TCJA) provisions, only up to $10,000 in property and other state and local taxes (SALT) can be deducted as a Schedule A itemized expense.

1098-E — The interest paid on your student loan is reported on this form and is sent by your lender it the interest tally is at least $600. You may be able to deduct this interest and possibly other loan-related amounts, such as origination fees and capitalized interest.

1098-T — Universities issue this tuition statement to students. It shows the amount of qualified education expenses the college kid paid. The info is needed to help in the claiming of education-related tax benefits, such as the American Opportunity or Lifetime Learning tax credits.

1099-INT — You'll get one of these forms for each savings, CD or other investment account in which you earned more than $10 in interest. Even if you reinvested the interest instead of receiving it as a cash payment, it still counts as taxable income.

1099-DIV — Earnings from stocks and mutual funds are reported here, including dividends and capital gains distributed that are more than $10. As with reinvested interest, if you used the dividends or distributions to buy more shares, you still have to pay taxes. However, the distributions and certain, qualified dividends are taxed at the lower capital gains rates.

1099-B — If you sold stocks, bonds or mutual funds, you will receive a 1099-B from your broker or mutual fund company. It will detail the number of shares sold, when sold and the amount of the sale. Since 2011, brokers also have been providing information on the basis (the cost of an asset plus some adjustments) of sold stock. This information, along with the date you bought the shares and the amount you paid for them, will help you figure your taxes on your profit. 1099-B forms are due to investors by Feb. 15.

1099-G — When you get a refund of state or local taxes, you'll get this form. If you claimed those taxes as an itemized deduction on your previous year's federal tax return, you must report the 1099-G amount as income in the year received.

1099-K — Payments you got via credit or debit cards or from third-party payment processors, such as Uber, PayPal, Amazon and eBay, will be reported on this form. There are triggers for amounts ($20,000) and number of transactions (200), so not every person who receives such payments will get a 1099-K. This income, however, is taxable and should be reported even without issuance of a 1099-K.

1099-MISC — Self-employed individuals, aka independent contractors, should a separate 1099-MISC from each client from which they earned $600 or more. This roughly is the self-employed version of a W-2 without, of course, any taxes paid via withholding. These should have been paid via estimated taxes.

1099-R — If you received a pension or a distribution from an individual retirement account or workplace retirement plan, you'll get a Form 1099-R with those details. The form is issued by your broker, pension plan manager or mutual fund company. Even if you rolled the retirement money into another employer-provided 401(k) plan or an IRA, you'll still get a 1099-R. You'll also get one if you converted a traditional IRA to a Roth IRA. A rollover usually is not a taxable event, but a pension payout may be.

5498 — Any contributions you make during the tax year to any individual retirement account are reported on this form. The 5498 shows traditional IRA contributions that might be deductible on your tax return, as well as any rollovers, including a direct rollover to a traditional IRA, made during the last tax year. It also reports amounts that were recharacterized from one type of IRA to another. 5498 forms or statements showing an account's fair market value or required minimum distribution (RMD) data are due by Jan. 31. However, 5498s with information on your contributions to such accounts aren't due to you by until May 31.

5498-ESA — This account reporting form has details on contributions to Coverdell Education Savings Accounts, formerly known as Education IRAs. The youngster named as beneficiary of the Coverdell should get a copy of this document by April 30.

Schedule K-1 — If you got money from an estate, trust, partnership or S corporation last year, you should get a Schedule K-1. However, because of the complexity of many of these financial situations, account managers tend to send out K-1s later in the tax season, often not until well after the April tax return filing deadline.

That's why filers who get K-1 forms usually file another popular piece of tax paperwork, Form 4868, Application for Automatic Extension of Time to File. This gets you six more months to get your K-1 and any other tax statements you need to fill out your Form 1040.

Substitute forms acceptable: The forms noted and linked in this post are the official IRS versions. You, however, probably will get a slightly different looking document.

That's OK. The IRS gives companies leeway to use statements that fit their software and system.

Just look for the notation on the reporting document of the form number you're expecting, as well as its identification as a "substitute" tax statement.

Double check data: Regardless of what format your statements take, be sure to double check them as soon as they show up in your snail mail or email box.

If you find a discrepancy against your own records, call the payor and get an explanation. By catching any mistake early, you'll be able to get the correct information in plenty of time to accurately file your tax return by the April deadline.

You also might find these posts of interest:

• The many versions of IRS Form 1099
• Key 2019 tax filing and paying deadlines
• Documents you need to file your 2018 return

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