If you are eager to file your tax return for the 2022 tax year in January or February, the IRS has a warning for you. There are some “key documents” you must wait for before you file in 2023.
What Documents?
In a statement by the agency last week, they urged “early filers” to watch out for Form 1099-K. This form is for reporting income from third-party payment networks such as Venmo or PayPal. Reporting your 1088-K income is extremely important because if taxpayers fail to do so, they may owe money and will then need to file an amended return. “A little extra caution” could save you time and effort, said the agency. Some CPAs recommend waiting until the end of February, or early March to begin filing.
More People will be Receiving 1099-Ks
Experts say that many more Americans will be receiving 1099-K forms for the first time this tax season. This is due to an announcement made by the IRS earlier this year stating that the old 200 transactions and more than $20,000 in income from third-party apps was cut to just $600. Even a single transaction can trigger the form. This change came with the announcement of the American Rescue Plan Act of 2021.
Why Having All Tax Forms Ready Before Filing Is Critical
To file your tax return accurately, you need to include all tax forms, such as the W-2 from your job, the 1099-NEC for contract work, and the 1099-G for unemployment benefits.
Known as “information returns,” employers and financial institutions send copies of these forms to taxpayers every year so they can report taxable activities. Your tax return should match these forms, assuming the details are correct.
Mismatches are automatically flagged by the IRS when it receives direct income reporting from companies. Experts advise waiting until the correct details are included. If you don’t, you may receive error notices and penalties in the future.
Wrap Up
With tax season just around the corner, it is important to ensure you have all the necessary documents and information you need to get your appropriate return and ensure you receive the return as fast as possible. To make sure this tax season is a breeze, contact our trusted professionals.