Filing taxes can often seem like a daunting task, but ensuring that all necessary forms are in order can prevent potential issues with the Internal Revenue Service (IRS). Missing or incomplete tax returns might delay processing or even trigger an audit within the IRS system. To navigate this smoothly, taxpayers should meticulously gather all required tax forms before filing their returns.
Income must be accurately reflected in the tax return, even if a formal tax form is not received. Employers and financial institutions typically report income and other relevant activities through information returns such as W-2s or 1099s, which are shared with both taxpayers and the IRS. These forms include W-2 for wages, 1099-NEC for contract work, 1099-G for unemployment income, and 1099-R for retirement distributions.
Tax refunds from the IRS are generally issued within 21 days; however, some returns may require additional review, potentially extending this period. To streamline the process, taxpayers can utilize their prior year’s tax return as a checklist to ensure all necessary documents are accounted for.
The IRS employs sophisticated software to compare information returns with what taxpayers report on their filings. To avoid discrepancies, taxpayers might need extra forms such as 1098-E for student loan interest or 5498 for IRA contributions. If itemized tax deductions surpass the standard deduction, forms like 1098 for mortgage interest or property tax credits might be necessary. Additionally, forms like 1098-T could be required for education tax breaks or receipts for claiming the child and dependent care tax credit.
"Check your mail routinely," advises Brian Long, a senior tax advisor at Wealth Enhancement in Minneapolis, emphasizing the importance of thorough preparation.
Depending on individual circumstances, the number of tax forms needed might vary each season. Ensuring that these forms are complete and accurate is crucial to avoiding any potential issues with the IRS. For those engaged in the gig economy or contractual work, forms like 1099-NEC must be included to accurately report income.