Tax filing season will soon be rolling around again, and it’s OK to admit that the filing process can seem a bit intimidating if you’re tackling your taxes yourself, where a sea of forms, documents, dollar figures and deductions can overwhelm anyone but the most experienced CPA.
But for the time being, there are really just two basic, key documents you need to remember when preparing and filing your tax return:
Both documents are informational forms for two different types of workers. If you’re a salaried employee on the payroll of your company, you’ll need a copy (or copies) of your W-2 from your employer(s), which will list all your income and wages earned this calendar year, plus tax withholdings for the calendar year for any and all employers you worked for.
If you’re a freelancer or independent contractor, you’ll need a 1099 form from each client who has paid you this year. Like the W-2, it will list all of your earnings for 2016, but unlike the W-2, no taxes will be withheld. You’ll need to do that yourself if you’ve earned more than $600 in contract work. Thankfully, technology is here to help with numerous resources if you’re a solopreneur looking to stay on top of your taxes.
To start, we’d recommend trying Benny, to keep track of your financial intake and output; a quarterly tax calculator to estimate the amount of taxes you’ll need to pay; and a service like Painless 1099 to help independent contactors automatically withhold your taxes, depositing the remainder into your checking or savings account to avoid spending any of your taxable pay.
If you’ve performed both payroll and contract work this year, you’ll need to include both your W-2 and 1099(s) as part of your tax return form. Both forms are informational; your wages, withholdings, Social Security and personal information are already filled out on the W-2 and 1099, so there’s nothing you need to complete or fill out. But you’ll need the information in order to prepare your taxes by the April 18, 2017 deadline. Tax filing season begins on Jan. 23, and you should expect either form in the mail by late January/early February at the latest.
We can all expect that problems may arise when filing your taxes, not the least of which includes erroneous information on your W-2 or 1099 — or not receiving either document at all. Here’s what to do when you receive your documentation, and what to do if you don’t.
The first thing to do when you receive your W-2/1099
Your W-2 or 1099 won’t arrive in the mail from the IRS. They’ll come direct from your employer, former employer, and/or contract employer.
The most important thing you should do after receiving your documents, but before hitting TurboTax or your preferred tax filing method, is to check for errors on all W-2s or 1099s:
- Is your name and address current and spelled correctly?
- Is the name and address of your employer/payer correct?
- Do your income/Social Security wages, tax withholdings (federal, state and local) and other earnings appear correct? You may want to cross check with pay stubs if there’s been a miscalculation; one decimal point out of place can screw up the entire tax return process.
- Did you receive the right form? A payroll employee shouldn’t receive a 1099, nor should a freelancer receive a W-2.
- Does your W-2 or 1099 form list the correct year? Yours should say “2016” at the bottom; if a prior year’s form is sent to you, whether or not the information is correct, it can’t be included in your tax return.
After you’ve verified everything is in place and correct, feel free to pass go, collect $200, and have fun filing away your taxes. (Though if you end up owing taxes this year, you may have to pay that $200 right back to the IRS!) If there’s an error or errors on your W-2 or 1099, or it’s early April and you’re still waiting for your documents, then we have a problem. Rectifying the situation, however, is simple.
What to do if your W-2 or 1099 is incorrect (or missing)
If you find any errors or inconsistencies on your W-2/1099, contact your employer/payer right away. They’ll need to fix the wayward information and resubmit a corrected form to you, and you’ll still need to stick to your tax return deadline with Uncle Sam.
If your mailbox is still empty by the end of February, don’t keep waiting. You need time to fill out your tax return, and rushing to complete it last minute will only create the possibility of making errors for the IRS. Contact your employer/payer and let them know you haven’t received your documents; it may have been lost in the mail, or it may never have been sent.
If you can’t reach them, or there’s no response, this is when the IRS can come to your rescue. You can call them for assistance at 800-829-1040. According to the IRS, have the following information handy:
- Your full name, address with zip code, phone number and Social Security number
- Your employer/payer’s name, address and phone number
- The employer identification number, or EIN, of your employer/payer (if you don’t have that information, don’t worry)
- An estimate of the all wages you’ve earned, the amount of federal tax withheld, and the dates of employment (refer to your pay stubs for this information, if necessary)
Once you’ve connected with the IRS with this information, it will contact your employer or payer to request any missing or errant info be corrected, and documentation re-submitted to you. In the meantime, in order to keep you on deadline, the IRS will send you what’s known as Form 4852 (a W-2 substitute) or Form 1099-R (a 1099 replacement form), along with instructions. You can use both of these forms to complete your tax return and file your taxes by April 18 in case you don’t receive your W-2 or 1099 on time.
One last thing to note: if you’ve finished your tax returns with Forms 4852 and 1099-R, and then your original W-2 or 1099 rolls in, fill out and submit to the IRS an amended Form 1040X if you discover there are any inconsistencies between your employer/payer’s estimates and your own.