Tax documents are on the way to you from employers, banks, stock brokers and other institutions and agencies that were involved in your financial lives last year. Each of these groups has, by law, until January 31st, or the next business day when that date falls on a holiday or a weekend, to get their annual tax documents in the mail to you.
Many of you may be receiving these documents electronically so be sure to check your email daily for these statements.
Common income, deduction documents
Most of you will depend on the same basic data to file your returns. If you work for an employer, The Internal Revenue Service expects you, and the employer, to get a statement detailing that income. The data is slightly different, depending on whether you get paid a salary or do contract work, but either way there is a form for either one.
This is a key form, you will receive one from each employer you worked for during the past year. Your W-2 shows how much money you made, how much income tax was withheld, Social Security and Medicare taxes paid, and any benefit contributions, retirement plans, medical accounts and child care reimbursement plans.
For most homeowners, mortgage interest is tax deductible, and this is the document that will tell you how much you paid in interest. Your lender is required to send you one of these forms if you paid at least $600 dollars in interest. Actually, your mortgage company probably won’t send you an official IRS form, but a document of its own design that contains the same data. In addition to the mortgage interest, other information often found on this statement includes amounts paid toward points to get a new loan and escrow disbursements for real estate taxes (deductible) and property insurance (not deductible).
If you are paying back a student loan the interest on your educational debt is reported on this form, and the lender must send you one if you at least $600 dollars in interest. You may be able to deduct your student loan interest and possibly other loan related amounts, such as origination fees and capitalized interest. To figure the deductible portion of the interest amount found on this form, a worksheet included in the Form 1040 and Form 1040A instructions will be used.
If you earned more than $10 dollars in interest on a bank account or a certificate of deposit, you’ll get one of these forms for each account. Don’t dismiss this statement, especially if you re invest the interest. Tax law says you received the income even if you don’t actually have it in your hand, and reinvested earnings are still taxable income. 1099 INT statements are issued to people who cashed in savings bonds as well.
Earnings from individual stocks and mutual funds are reported on this form. This will show dividends and capital gains distributed over $10 dollars. As with the reinvested interest, if you used the dividends or distributions to buy additional shares of stock or mutual funds, you still have to pay taxes on these amounts. However, the distributions and certain, qualified dividends are taxed at the lower capital gains rates.
This is perhaps the most overlooked form that people forget they have, and causes a reason for the IRS to send you notice during the year for explanation. If you sold stocks, bonds or mutual funds, you will receive this form from your broker or mutual fund company. This will tell you the number of shares sold, when they sold and the amount you got from the sale. You’ll need this information, along with the date you bought the shares and the amount you paid for them, to figure your taxes. Beginning with the 2011 statements, brokers are required to provide all this information, the basis (cost of the asset plus some adjustments) of the stock sold.
If you got a refund of state or local taxes last year you will get this form. If you used those taxes for a deduction on your previous year’s federal income tax return (itemized on Schedule A) you will need to report the amount on this year’s tax return. You don’t need to worry about reporting this refund as income if you took the standard deduction. This from will also be sent if you received any unemployment during the last tax year.
If you received payments via credit or debit cards or from third party payment processors, such as paypal, amazon and eBay, you might receive this form reporting those amounts. There are triggers from amounts ($20,000) and transactions ($200), so not every person who receives such payments will get the form. This income, however, is taxable and should be reported even without issuance of a 1099 K. The new statement is an attempt to get more information on such payments to the Internal Revenue Service.
If you received a pension or a distribution from an individual retirement account or retirement plan, this form provides the details of those transactions. The form is issued by the broker, pension plan manager or mutual fund company. You’ll also get the form if you rolled over any money in a retirement plan, usually a 401 (k) to an IRA, or if you converted a traditional IRA to a Roth IRA. A rollover is not taxable but needs to be reported, but a pension payout may be.
Self employed individuals who earned $600 or more should get this form from the employer. You should get a separate form for each independent job you had during the year.
Late arriving forms
There are a lot of statements you might need for your tax records, but because of the intricacies of the financial arrangements they cover, these documents do not always arrive before the April tax filing deadline. But if you get an extension to file, you shouldn’t have any issues.
Any contributions made during the calendar year to any individual retirement accounts are reported on this form. It shows the traditional IRA contributions that might be deductible on your tax return, as well as any rollovers, including direct rollover to a traditional IRA, made during the last tax year. It also reports amounts re-characterized from one type of IRA to another. It notes any amounts converted from a traditional IRA, simplified employee pension or savings incentive match plan for employees to a Roth IRA.
Form 5498 ESA
Contributions to Coverdell education savings account, formerly known as education IRAs, previously were reported on Form 5498, but these plans now are tracked on this statement. The youngster named as account beneficiary should get a copy of this document by April 30th.
Finally, if you received money from an estate, trust, partnership or S corporation last year, you should get this form. However, because of the complexity of many of these arrangements, account managers tend to send them out later in the tax season, sometimes not until after the April filing deadline. Because you need to know this amount of income to file your return, taxpayers who get this form tend to file Form 4868, Application for Automatic Extension of Time to File, to get six more months to get all their tax statements in hand.