Tax season is due to start in just a couple weeks, and many taxpayers who are expecting refunds may already be hoping to get a head start on preparing their returns.
Unfortunately, you can't count on having all the tax forms you'll need in order to fill in the blanks for the IRS by the Jan. 27 starting date of tax season. Below, we'll look at some of the most important dates in 2020 by which you can expect to receive key tax forms, along with why each form could be useful for you.
Jan. 31: A big date for tax data
The most common deadline for businesses and financial institutions to provide tax forms to filers this year is Jan. 31. By that date, you can expect to see the following forms:
- Form W-2, which reports employment income, withheld taxes, and other key information.
- Form 1099-INT, which reports interest income.
- Form 1099-DIV, which reports dividend income.
- Form 1099-R, which reports taxable distributions from retirement plans.
- Form 1099-MISC for independent contractors receiving income from clients.
- Form 1098, which reports deductible mortgage interest and fees.
Of these, the W-2 is by far the most common and important. Not only do wages and salaries constitute the largest share of income for most taxpayers, but the amount of taxes withheld from your paychecks will be a key factor in whether you owe the IRS money or will receive a refund. For a large fraction of the American population, the W-2 will be the only form they'll need to prepare their returns.
Those who have investment income can expect to receive a host of forms related to their portfolios, and most of that information should be in hand by Jan. 31 as well. However, it takes a bit longer for some tax information to become available. That can make the forms you get in late January misleading, in the sense that they could lull you into thinking you're ready to file when in fact you're not.
For data that can require a bit more time to compile, the IRS has generally given institutions a Feb. 15 deadline to get forms out to taxpayers. Those include:
- Form 1099-B, which reports sales of investments in brokerage accounts.
- Form 1099-S, which reports real estate sales.
- Form 1099-MISC for items other than compensation for services.
The information on Form 1099-B is especially vital in calculating the amount of capital gains or losses that you'll have to report. Included on Form 1099-B are your broker's data on your cost basis, the proceeds you received from each sale, and how the profits or losses get categorized (short term vs. long term). You'll want to check this information closely for disparities because any mismatches between what you file and what the 1099-B form says could raise red flags at the IRS.
March 15: K-1s from electing large partnerships
Most people who own stocks, bonds, and other typical investments will have their income from those investments reported on various 1099 forms. However, if you invest in a partnership, you'll get tax information related to it on a Schedule K-1, and these forms take longer to complete. Electing large partnerships are required to provide K-1s to their investors by March 15.
April 15: K-1s from smaller partnerships
Among entities using Schedule K-1 to report tax information, those that don't qualify as an electing large partnership have until April 15 to provide forms to their investors. That basically means that investors in such vehicles will have little choice but to request an extension from the IRS, which will allow them to file their returns after the standard April 15 deadline.
How to handle late forms
Despite the government's rules, and businesses' and institutions' best efforts, not all taxpayers get all their forms on time. If you're one of them, the first thing to do is to contact your employer or the financial institution involved. Sometimes, forms get lost, but it's almost certain that the IRS will have gotten copies of all the paperwork you should have received. Failing to report any income that shows up on those forms is a surefire invitation for an audit.
Nobody wants to wait for tax forms when they have a refund coming, but filing before you have all the necessary information can create big problems. By knowing when forms should come in, you'll be able to have a better idea of when you can file and start the process of getting your tax refund.