Wait For It

It’s almost the end of January and across the country taxpayers are haunting their mailboxes and payroll departments in hopes that those pesky W-2s and 1099s will magically appear. The closer to the end of the month, the more frantic they become. Their friends have filed but they are still waiting. So, they make the decision to try to file without everything they should have. Noooooo!

Of course, we’re talking about taxpayers who are sure they are getting a refund. I’ve never seen anyone rush in when they know they will be paying a balance due.

If the taxpayer uses a paid preparer, especially if they use the same preparer each year, they might find themselves making another trip to the office once they really get their form. Most tax software can be set to bring forward W-2 and 1099 info. I use it as a double check against what the client brings in to me. It’s easy to forget an employer where you only received one pay check in January. When that happens, I can estimate the return results, but the client has to come back when they get that form.

What happens when the taxpayer actually files a return without a form that should be reported, whether they forgot or deliberate left it off? They should file an amended return including the missing information. This takes the 1040X form. And no, this is not an alternative to waiting for all the documents they need. While it might result in a refund, there is a very good chance the taxpayer will have a balance due and have to pay back part of the refunds they received. Also, if the taxpayer waits until after the due date for that year to file the amended return, they could be subject to interest and penalties.

If a taxpayer leaves a W-2, 1099 or other income reporting form off their tax return and doesn’t file an amended return, the IRS will catch the omission when they run their matching program. Since the IRS gets copies of all the informational forms, they can create a basic tax return for the taxpayer and check what is on the taxpayer’s return against their return. When the incomes don’t match and results in more tax being due, a letter will be issued asking for the missing tax and penalties and interest.

It’s frustrating to wait for all your W-2s and 1099s when everyone around you is talking about their refund. But it’s less frustrating than coming up with the money to pay Uncle Sam (with interest and penalties) when your rush catches up with you. Employers and payers aren’t required to have those forms mailed until January 31^st. Notice the word mailed. You do have options if you don’t receive a form you should have but they aren’t available until after February 15^th and only if you have contacted the employer/payer.

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