Your tax return could be ‘flagged for audit’ without these key forms, experts say

Many taxpayers are eager to file returns quickly to collect a refund, but it’s important to gather the necessary tax forms first, experts say.

Every year, employers and financial companies report income and other activity on so-called information returns, such as W-2s and 1099s, with a copy going to taxpayers and the IRS.

The agency has “very sophisticated software” that compares information returns to what’s reported on your filing, said Elizabeth Young, director of tax practice and ethics for the American Institute of Certified Public Accountants, or AICPA.

Your return can be “flagged for audit” when there’s a mismatch, she said. 

While the IRS issues most tax refunds within 21 days, some returns may require “additional review” and can take longer, according to the agency.

Here’s a breakdown of the key tax forms you’ll need to minimize that risk as you file your return this season — and when to expect them.

When to expect tax forms 

Although many tax forms come in January, others may take until mid-February to March or longer, according to the AICPA. Typically, investment statements are among the last forms to arrive, especially for more complicated assets.

For earnings, your tax forms may include a W-2 for wages, 1099-NEC for contract or gig economy work, 1099-G for unemployment income and 1099-R for retirement plan distributions. 

However, your return should reflect income even when you don’t receive a tax form, Young said. 

“If you earn it, it’s reportable,” she said. “You’re accountable for it.”

Other forms can help secure tax credits and deductions.

You can claim an “above-the-line deduction” even if you don’t itemize tax breaks. Tax forms for these may include a 1098-E for student loan interest, 5498 for individual retirement account contributions or 5498-SA for health savings account deposits. 

If itemized tax breaks exceed the standard deduction, you may need a 1098 for mortgage interest, your annual giving statement or property tax credits. 

You also may need a 1098-T for education tax breaks or receipts to claim the child and dependent care tax credit.    

‘Check your mail routinely’

As your tax forms arrive, it’s important to stay organized, said certified public accountant Brian Long, senior tax advisor at Wealth Enhancement in Minneapolis.

“Check your mail routinely,” he said. However, some forms may come digitally, so you’ll want to check your online accounts periodically for updates.

You can use your “prior-year tax return as a checklist,” Long said. But keep in mind that you may need fewer or more tax forms this season, depending on your situation.