As the tax filing season approaches, many individuals are anticipating larger refunds this year, which is encouraging earlier filing. However, tax experts caution against rushing the process. Ensuring that all necessary tax forms are in hand is crucial, as incomplete submissions can result in delays or complications in processing.
Every year, employers and financial institutions are required to report various income and transaction details through information returns like W-2s and 1099s. These forms are sent to both taxpayers and the IRS, allowing the agency to flag inconsistencies or omissions quickly. April Walker, a senior manager for tax practice and ethics at the American Institute of CPAs, emphasizes that accurately reporting all income is vital in avoiding potential audits. “We don’t know all the things that make an IRS audit happen, but one of the best ways to avoid that is to ensure that you are fully and completely reporting everything,” she notes.
In the event of mistakes or missing information, taxpayers may receive an automated CP 2000 notice from the IRS, which outlines discrepancies and proposes adjustments based on the reported information. While errors can result in an “accuracy-related penalty” for unreported income, they don’t always lead to an audit, according to Josh Youngblood, owner of a Dallas-based tax firm.
The upcoming filing season is expected to be particularly challenging for some taxpayers. A report from the National Taxpayer Advocate highlighted concerns over a 27% workforce reduction at the IRS, management changes, and the implementation of recent tax reforms. These factors may lead to delays in taxpayer services, making accuracy in filing even more important.
Taxpayers can expect various tax forms to arrive at different times throughout the tax season. While many forms will be issued in late January, others could take weeks. For instance, 1099s for investment income are typically among the last to arrive, especially for complex financial products. It’s also common for the first form from financial institutions to indicate that a corrected version will follow.
For wage earners, essential forms include W-2s for salaries, 1099-NEC for freelance or contract work, and 1099-G for unemployment income. Taxpayers claiming new deductions related to tips or overtime might find that these figures aren’t reported on their forms, requiring them to calculate qualifying income independently.
Additionally, the introduction of Form 1099-DA in 2026 will guide individuals through the tax implications of digital asset transactions from the previous year. Other forms, like 1098-E for student loan interest and 5498 for retirement contributions, can facilitate claiming various tax credits and deductions.
Overall, while the prospect of a sizable tax refund can motivate early filing, experts recommend waiting until all forms are available to ensure complete and accurate submissions, thus preventing unnecessary complications down the line.
