August 18, 2022
Let’s talk … Tax Documents
One thing that I have noticed when preparing tax returns and working directly with clients one on one is the confusion about tax documents. A great example is when someone receives a notification via email saying, “There is a new tax document available, click here”. The client is then taken to a portal where they need to login and remember a password. Once in their account, where do they go next? Which document is the actual tax document?
As the preparer, I often receive documents that are not required to complete a return such as 401K summaries, or a full year worth of bank statements.
It is important to note that any document that is a formal tax document will state on it “Used for tax purposes” or something along those lines, like “Official Tax Document”.
While preparing tax returns, I work along side clients and have a process that I do when preparing a current year tax return. I will ask clients for some of the documents listed below and they have no clue what form I am referring to. I think that as a taxpayer, it is important to know what documents you may need to provide your tax preparer and familiarize yourself with how to obtain those forms.
Popular Forms:
Form 1095-A – Health Insurance Marketplace Statement (If a taxpayer purchases health insurance through marketplace, they will receive this in the mail.)
Form 1095-B Form – Health Coverage (Typically received in the mail)
Form 1095-C – Employer-Provided Health Insurance Offer and Coverage (Typically received in the mail)
Form 1099-SA- (Anytime an HSA account is set up for high-deductible health insurance plans and funds are used, this form will be issued and need to be reported on a tax return.)
Form 1099-B/1099-S – Stocks & Investment Sales (This document used to be mailed but as technology has changed, a lot of brokerage firms will link this in their client’s accounts instead of mailing them. Also known as a brokerage statement.)
Form 1099-Div/1099-Int/1099-OID – (This document will list a distribution received as a dividend or interest and is on its own individual form separate from a 1099-B, and can often be found in a client account or portal; sometimes these are mailed.)
Form 1099-G – Unemployment Compensation (Reports unemployment compensation; can also be any grants or state payments through programs.)
Form 1099-K – Payment Card and Third-Party Network Transactions (typically supplied to a taxpayer if they conduct a business such as a MLM where payments are made through a separate portal.)
Form 1099-R – Retirement Distributions – (If a taxpayer has a retirement account that they receive a monthly distribution from, they will receive this document at the end of the year; chances are if it isn’t received in the mail, it may be available when logging into the client portal or account.)
Form 1099-S – Real Estate Proceeds – (Often provided after the sale of a home and provides the total amount received.)
Form 1099 – Self Employment, Interest and Dividend Earnings – (1099-NEC is an example of this form. Examples I have seen reported on this form were from interest or dividends paid to workers who paid union dues through the UAW.)
Form 1099-Misc – Self-Employment Income – (If contract work is performed, chances are this document will be issued especially will if over $600 was received from a vendor where work is performed; no taxes are taken out.)
Form 1098-T – Tuition Statement – (College tuition statement provided by a university. It is important to note that most colleges today, will send this document to a student via a student portal.)
Form 5498 – IRA Contributions – (Lists information such as contribution to a Roth IRA or Traditional IRA.)
Form W-2 – Federal Tax Withheld (Supplied by an employer which states total wages accrued for a year and taxes paid.)
Form W2-G – Gambling Winnings – (When anything over $800 is received as gambling winnings it is reported on this form; it is typically provided at the time the winnings are disbursed and must be kept for tax purposed)
This is part 1 of a multipart series of helpful and useful information that we are offering to taxpayers as a part of our mission to keep those informed.
R. Jones
QATPS
