The most important tax document to have (or get) now
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As the April 15 tax deadline comes near, you need to know where to get what you’re missing.
NEW YORK (MainStreet) — Even though most Americans filed their taxes weeks ago and have by now kicked back to wait on their refund check, many will spend the next week scrambling to gather the documents they need before that all-important April 15 deadline.
Thankfully, most businesses and investment firms are diligent when it comes to sending out the appropriate W-2 and 1099 forms, but other essential documents may need to be requested, such as those reflecting mortgage and tuition payments.
We checked in with the experts to find the most important tax documents you’ll need to find now, and what to do when you — or a former employer — can’t find them in time.
Documents you need now:
Your Social Security card/number
Although this number is probably something you learned by heart in elementary school, if you have any doubt, keep your card handy.
“Your Social Security number is used as your taxpayer identification when filing a return,” says H&R Block senior tax preparer Riley Holmes.
“Social Security cards are used to verify the spelling of the individual’s name as well as their SSN itself so the return matches their IRS master file and processes smoothly,” says Jackson Hewitt Chief Tax Officer Mark Steber.
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If you need a cheat sheet and can’t find your card, your Social Security number will also appear on the W-2 from your employer.
Salary documentation (W-2)
“Your W-2 is the key form, and you’ll need one from each employer you worked for during the past year,” says Paul Golden, spokesman for the National Endowment for Financial Education.
“Your W-2 shows how much money you made, how much income tax was withheld, Social Security and Medicare taxes paid and any benefit contributions — retirement plans, medical accounts and child care reimbursement plans,” Golden says.
If you held more than one job during the past year, making sure you have W-2s from all your employers is imperative, Steber says.
“If you leave any income items off your return and IRS catches it — and they will — then you will face penalties, interest and other issues,” Steber says.
Bank interest form (1099-INT)
“If you earned more than $10 in interest on a deposit, you will get one of these forms for each account you have,” Golden says. “This document is very important if you reinvested the interest.”
Tax law says you got the income even if you didn't actually have it in hand, and that reinvested earnings are still counted as taxable income, Golden explains. You will also get one of these statements in the event you cashed in a savings bond.
If you have any doubt, Holmes notes that all interest is considered taxable income if the interest you get or have credited to your account can be withdrawn without penalty.
Dividend income (1099-DIV)
Your 1099 DIV will be where earnings from individual stocks and mutual funds are reported.
“The documents show all dividends and capital gains distributed over $10. If you decided to use the dividends to buy any additional stocks or funds, you will have to pay taxes on those purchases,” Golden says.
Keep in mind that dividends can be classified as ordinary or qualified, Holmes says.
“Ordinary dividends are taxable as ordinary income, while qualified dividends that meet certain requirements are taxed at lower capital gain rates,” he says.
Student loan interest payments (1098-E)
The amount of interest you pay on a qualified student loan may be deductible if it meets the requirements of the Student Loan Interest Deduction, and it will be be detailed on your 1098 E if you are paying back a student loan, Holmes says.
“The interest on your educational debt is reported on this form; your lender must send you one,” Golden says.
Tuition payments (1098-T)
You may be able to deduct qualified tuition and related expenses that you pay for yourself, your spouse or a dependent as part of the Tuition and Fees Deduction, Holmes says.
Just make sure you retain your expense records for anything you plan to deduct against your total income, Steber says.
Mortgage Interest Statement (1089)
“For most homeowners, mortgage interest is tax-deductible, and your 1089 will tell you how much you paid last year,” Golden says.
If the mortgage interest you paid was more than $600 for the year, your mortgage holder should have sent you your 1098 around Jan. 31.
Proceeds from Broker and Barter Exchange (1099 B)
Just for a further muddying of the tax waters, there’s another 1099 out there that sometimes goes overlooked: the 1099 B.
“Anyone who sold stocks, bonds or mutual funds will receive one of these forms. This will tell you the number of shares sold, when they sold and the amount you got for the sale,” Golden says.
Keep an eye out for any 1099s that show income from investments, as these are reported to the IRS.
What to do if an employer is dragging their feet on sending you what you need?
“Documents can get lost or misplaced for many reasons — a taxpayer may have moved, an employer may have gone out of business or gone bankrupt, or the items may have simply gotten lost in the mail. It happens, but if you do not have your documents yet, then in all likelihood, they’re not coming,” Steber says.
Contact your employer
Your first course of action should be to contact your employer and get a new copy immediately. Most employers are quite experienced with this by now — but they’ll be very busy this time of year, so get your request in as early as possible, Steber says.
Consider filing IRS Form 4852
If your company or employer is unreachable, consider alternatives such as IRS Form 4852 — the Substitute W-2, Wage and Tax Statement.
Form 4852 is completed by using your final pay stub. If you use it, however, be prepared to provide an explanation for where information for your income and withholdings has come from and why your W-2 is not available, the experts warn
When all else fails, contact the IRS
If the IRS Form 4852 sounds like too much for you and your former employer is absolutely unreachable, you can contact the IRS and they’ll reach out to your employer on your behalf.
“If you cannot get your employer to send a W-2 you should contact the Internal Revenue Service. The number to reach them is 1-800-829-1040,” Golden says. “Make sure you have your employer’s business name, address, telephone number and, if you can track it down, the FEIN number. Make sure you have all of your personal info, including your Social Security number, at the ready, and the IRS will request a W-2 on your behalf.”
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