Tax Prep Checklist: What Tax Forms Should I Expect?

Tax Prep Checklist: What Tax Forms Should I Expect?

Tax season is officially here, and your tax forms or extensions will be due to the Internal Revenue Service (IRS) soon enough. But before you can have us prepare the forms necessary to file your taxes or extend your filing date, you’ll be receiving quite a few forms. From W-2s to 1099s, a 1095, donation receipts, and more, you might be asking yourself, “What tax forms should I expect in my email inbox or mailbox?”

Here at FPFoCo, clients like you often wonder whether you’ve received all of the forms you should be expecting so you can begin your tax preparation process. Or you get started early only to receive one snail mail tax form later than the rest. I hope that you can use this information to build a tax prep checklist that you can use to understand when you’re ready so you can take full advantage of our tax preparation services this year and in the future. Of course, don’t forget that you can always reach out with tax-related questions! This is part of your unlimited meeting and consultation time included in the ongoing comprehensive services for which you engage us.

Deadlines for custodians, employers, the government, banks, businesses, and more to send out tax forms vary. They range from January 31 all the way to March 15, and the time it takes for them to reach your inbox or mailbox after they’re sent can also vary due to delivery times. That said, the forms you receive depend on your taxable actions throughout the tax year. So you can expect certain forms based on what your 2023 looked like financially. In this blog, I’ll share some common life and financial situations that would lead you to receive certain forms so you can understand which to expect. Be sure to add these to your tax prep checklist!

Employment and Contract Work

In my experience, the majority of taxpayers are looking forward to financial independence or retirement. During your working years, however, you can expect to receive certain tax forms based on the nature of your employment. 

Non-exempt or exempt employment (aka salaried or hourly employees): Form W-2

This form reports your income and taxes you’ve already paid throughout the year on your paychecks. If you worked for multiple employers as an employee, you can expect a Form W-2 from each.

Independent contractors: Form 1099-NEC

This form reports the income you earned through contract work. You should receive one from each of the businesses from whom you completed contract work during the tax year.

Employees with employer-sponsored health insurance: 1095-B or 1095-C

Smaller businesses issue 1095-Bs while larger employers issue 1095-Cs. Like Form W-2, those who worked for multiple employers who offered health insurance throughout the year should expect a Form 1095 from each. These forms have more limited use cases now that there is not a penalty for not having health insurance under the Affordable Care Act, but there are some circumstances where they matter. Better safe than sorry; include them in your tax file.

Marketplace health insurance: 1095-A

If you didn’t get your health insurance through your employer, you may have purchased a policy through your state’s health insurance marketplace. In that case, you’ll be receiving Form 1095-A. This form is critical in calculating your premium tax credit correctly. If you receive a 1095-A and don’t include the information on your tax return, it’s almost a certainty that you’ll be hearing from the IRS.

Bank, Brokerage, and Retirement Accounts

If you made the switch from TD Ameritrade to Charles Schwab during 2023, don’t forget: You’ll likely receive a form from each custodian for the same account. Be on the lookout for double forms!

Homeowners with mortgages: Form 1098

Are you a homeowner who has joked, “The bank owns my home!”? Dark humor aside, if you have a mortgage, keep an eye out for Form 1098. Lenders use this mortgage interest statement to track the amounts borrowers pay in interest. If you don’t pay more than $600 in interest during a given tax year, you might not receive this one.

“Consolidated” 1099

The consolidated Form 1099 is often provided by brokerage companies for taxable (aka non-qualified) investment accounts. The consolidated form includes multiple Forms 1099 on a single document. Most commonly Forms 1099-DIV, 1099-B, 1099-INT, and 1099-OID are brought together on this panacea of a tax form.

Bank, brokerage, or credit union account holders whose money has earned interest: 1099-INT

Earn an annual percentage yield (APY) on a checking or savings account? You’ll be receiving a 1099-INT if you received $10 or more in “free money” throughout the tax year. While banks are the most common issuer of 1099-INTs for the majority of our clients, you may receive a 1099-INT from other institutions — like life insurance companies and private lenders — if you’ve earned interest.

Dividends paid on investments: 1099-DIV

Earned dividends? A 1099-DIV is likely coming your way. This is how brokerages, companies, and other entities record the dividends they’ve paid out to you on your investments.

Sold investments: 1099-B

If you sold investments in your taxable investment account, you’ll receive a Form 1099-B to report those sales. In a lot of cases, this form will also report your cost basis and other information about the investment you owned.

Distribution from a retirement plan, IRA, pension, annuity, and more: 1099-R

If you took cash out of a retirement plan or IRA to pay for living expenses or received a regular payment from a pension or annuity, you should receive a Form 1099-R for each such distribution. You’ll also receive this form if you made charitable gifts or qualified charitable distributions (QCDs) from such accounts. You’ll need to make a note of the portion of the total that was given directly to a qualified charity.

Regular Roth conversion: 1099-R

If you had dollars in an IRA that you converted to your Roth IRA and paid tax on, keep an eye out for your Form 1099-R. While you didn’t distribute those dollars to yourself to use or keep in a non-retirement account, this is how your Roth conversion is reported to the IRS. Form 8606 is where we’ll handle all of the details.

“Backdoor” Roth IRA contribution: 1099-R

Similarly, if you completed an IRA contribution and corresponding Roth conversion (aka a backdoor Roth IRA contribution), you might be a little confused about why there was a “distribution” from your IRA last tax year when you didn’t take money out of your retirement accounts. The money coming out of your traditional IRA is characterized as a distribution — meaning you’ll receive a Form 1099-R — even though it was converted to your Roth IRA. You will need to file a Form 8606 to show your non-deductible IRA contribution and the conversion, but we can take care of it for you as a Comprehensive Services client.

Education

Tuition and fees: 1098-T

If you or your child attended an accredited post-secondary educational institution (i.e., college), you’ll be receiving a Form 1098-T. This will report the amounts paid during the tax year. There’ll also be other useful information on the form, including whether or not the school considered the student at least half-time and if any amounts were paid for another school year.

Student loan interest: 1098-E

With federal student loan payments resuming in 2023, one form you may have forgotten about during the payment pause was Form 1098-E. This form will report the amount of interest you paid on your student loan, which may be tax deductible.

Business- or Entity-Related Tax Forms

Income received as a business partner, S-corp shareholder, or beneficiary of an estate or trust: Schedule K-1

If you receive income from a business partnership or S corp, you’ll receive a Schedule K-1. This is how the business or corporation reports its income and losses, tracking how they’re passed down to business partners or S corp shareholders. If you’ve received a K-1 before,  you probably know that they tend to arrive later than the rest of your tax forms. That’s because the businesses have until March 15 to issue these forms to their participants. 

With so much coming your way, organization is key as you ramp up your tax preparation preparedness! Check out our other blogs to help you get and stay organized as you work with us to prepare your tax return or returns — and after!

Getting Your Financial House In Order

Modern Financial Planning: Dealing with Documents

Spring Cleaning for Paperwork Privacy

And of course, please don’t hesitate to reach out with any tax-related questions along the way!