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Don't Start Your Taxes Until You Get These 4 Documents

By Dan Caplinger - Dec 29, 2019 at 7:01AM

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Even if you want to get a jump on preparing your return, it's almost impossible without some backup.

When most people celebrate the new year, tax returns aren't generally on their minds. But if you're expecting to get a tax refund and itching to have that money in your pocket as soon as possible, there's a good reason to want to have your return prepared quickly and get the ball rolling on getting your hard-earned money back from the IRS.

Nevertheless, even those with the most incentive to get started on their tax returns have to keep in mind that there are limits to how early they can file. The IRS doesn't even start to accept returns until late January, and even then, you might not have all the information you need to complete an accurate return. In particular, without the following tax documents, trying to file can cause you to make mistakes and require you to file amended returns that can cause even more delays in getting a refund.

Old style 1040 tax form with magnifying glass on top of it.

Image source: Getty Images.

1. W-2s

If you're an employee, then you'll get a W-2 form from your employer. The IRS requires employers to get W-2s to their workers by Jan. 31, although some get them out earlier in that.

The reason why the W-2 is important is that it has a lot of information that goes directly onto your tax return. You'll find your income for both federal and state purposes, as well as amounts you've had withheld from your pay for things like income tax withholding, payroll taxes for Social Security and Medicare, contributions to retirement plans, or health-related items like flexible spending accounts or health savings accounts.

Some taxpayers decide that they can figure out what's likely to show up on the W-2 based on other sources, such as their final paycheck of the year. If there are disparities between what you put and what ends up on the official W-2, however, it'll increase your chances of your return getting bounced back or audited. That's why waiting to have your W-2 is the best move.

2. 1099s

There are many different types of 1099 tax information forms, and they cover nearly all of the other ways that people make money. Investment income typically comes on forms like the 1099-B for brokerage transactions, 1099-DIV for dividend income, and 1099-INT for interest income. Work as an independent contractor typically gets reported on 1099-MISC. 1099s usually get sent out between the end of January and mid-February.

Just like W-2s, your financial institutions or other income providers have to file their 1099s with the IRS as well as giving you a copy. In the event of a mismatch, there can be problems, so it's good to have your 1099s in hand as you prepare your return.

3. 1098s

W-2s and 1099s focus on income, but other forms give you vital information on deductions you can take. 1098s cover the following items:

  • The original Form 1098 reports mortgage-related information, including interest, taxes, and any mortgage insurance premiums you've paid.
  • Form 1098-T covers money paid for tuition and related fees, which taxpayers can use to claim education-related credits and deductions.
  • Form 1098-E reports interest on student loans, which is often deductible as well.

Again, you might be able to figure out the information on these forms from other sources. But because the 1098s make it easy just to copy figures directly onto your tax return, the safest thing to do is to wait until they're available -- typically toward the end of January.

4. Account statements for 2019

Finally, you'll want to have year-end statements from your financial providers to give you the backup you need to claim income and deductions. Having final bank and investment account statements will let you verify the income amounts that show up on your 1099s, and bank account records will also show items you've paid that could be deductible on your tax return. Similarly, end-of-year credit card statements can include deductible expenses as well.

Your account will tell you when it's sufficient to have monthly or quarterly statements and when you'll need to keep receipts as well for documentation. Having the general numbers, though, will make it easier to get a head start on tax preparation.

Be ready to wait

If you're expecting a big refund, waiting is the hardest part. In order to avoid any unnecessary mistakes, the smartest thing to do is to stay patient and wait until you have all the information you need to file a complete and accurate return. The consequences of jumping the gun can be serious enough to make it worth it to wait.

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