Gather your 2019 documents now

Which ones and how to prepare?


Melinda Nelson, CPA

Whether you hire a professional or do it yourself, there is lots of information you need in order to file your tax return. It might seem like a daunting task to sort through all the paperwork. Maybe you have forms locked in a dusty, fireproof safe or stashed in a bag in the back of your car. Well, it’s the time of year to gather them up and prepare for filing.

Let’s start with the easy and most obvious ones. You need last year’s tax return, both federal and state. You also need the Social Security numbers for yourself, your spouse and all your dependents. Remember, dependents can include elderly parents.

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Gather all documents that confirm the taxable money you received and deductions you paid during the previous year. These could be Forms W-2, 1099 or 1098. But what do all these numbers mean? Let’s break it down.

Form W-2

Your Form W-2 reports the amount of taxable income you received for the prior year and is essential to filing your taxes. You can’t complete your return without it! Your employer will either mail you your W-2 or make it available for download. Your employer must have your W-2 ready no later than January 31, so you should receive it by the first week of February. Even if you quit a job last year, you should still get a W-2 for it, so make sure your address is up-to-date with any previous employers.

When you receive your W-2, make sure you look at it right away. If there’s an error, you’re going to want to get that fixed ASAP. Notifying your employer of any corrections quickly increases the chance the corrections are made before the IRS receives its copy of your W-2, which would save you time and a headache in the long-run.

Form W-4

Form W-4 is basically an easy form that can get very complicated very quickly – depending on your filing status and if you have more than one job. Fill out this form to tell your employer how much federal tax to withhold from your paycheck in the current year. A complimentary Arizona withholding form, Form A-4 can also be completed.

The IRS issued a new W-4 format for 2020. The earlier drafts of the form raised concerns that the form was too long and too complicated. While the new 2020 W-4 isn’t the easiest to use, the IRS released FAQs to help.

Form 1099-MISC

This form is generally used to report earned income that is not wages. For example, you might have rental income (Box 1) or non-employee compensation (Box 7). Like your W-2, a 1099-MISC must be in the mail to you by January 31. Next year, the 2020 information will be split into 2 forms: Form 1099-MISC and Form 1099-NEC. How’s that for tax simplification!

Form 1099-R

The 1099-R is used to report retirement income such as distributions from IRAs, 401(k)s, pensions, annuities as well as rollover distributions. It will tell you the total amount of your distribution and the taxable amount if some portion isn’t fully taxable (which is generally the case for pension and annuity payments). It also reports any tax withholding on your retirement distributions. Box 7 contains a distribution code that tells you if you’re subject to penalties for early withdrawals and tells your CPA if your distribution is taxable or nontaxable.

Did you do a Qualified Charitable Distribution (QCD) from your IRA? Your 1099-R won’t reflect it, so be sure to make the necessary adjustments on your tax return or risk including too much income in your tax return.

Essentially, any time you have a transaction with a retirement account, you should receive a 1099-R. Distributions of $10 or more must be reported along with rollovers, even if they’re nontaxable. Your 1099-R must be in the mail by January 31 and will come from the fiduciary of your account.

Form SSA-1099

Form SSA-1099 reports your Social Security benefits received in the prior year, any benefits you were paid, your net benefits, the amount you paid for Medicare premiums and if you had any voluntary federal withholding. You may not realize that a portion of your Social Security benefits may be taxable depending on how much other income you have. This form is mailed to you in January. If you don’t receive it, or you need a replacement, visit the Social Security website.

Form W-2G

If you receive a W2-G, congratulations on your gambling winnings, but now it’s time to pay the tax. Whether you receive a W2-G depends on the game you play and how much you win. It will be issued by the casino, usually on the day of your winning (they will not mail you a copy in January), and you will receive one form for each jackpot. One copy will go to you and a copy is also sent to the IRS. The W2-G reports how much you won, where you won it, what type of game you were playing, any federal income tax withheld from your winnings and some other transaction details as well as identify verifying information.

Form 1098

This form reports the amount of mortgage interest you paid to your bank last year along with the outstanding mortgage principal as of January 1, origination date of your mortgage, refunds for overpaid interest, mortgage insurance premiums and mortgage points paid. You will receive a separate 1098 if you have a rental property or a second home with a mortgage on it. Property taxes you paid through your escrow account will appear on either your 1098 or an accompanying statement.

Other forms

Forms 1099-INT, 1099-DIV and 1099-B are issued by brokers to report interest, dividends and sales of stocks and mutual funds. These generally hit your mailbox in mid to late February.

If you have questions about any forms you receive, contact your Henry+Horne professional advisor.

Melinda Nelson, CPA, Partner, specializes in tax planning and compliance involving closely-held businesses and their owners. She also practices in estate, gift + trust planning and taxation. You can reach her at or (480) 839-4900.