If you expect to file taxes as early as January 2023, the IRS has a warning

By Kate Dore -

If you're anxious to file your 2022 tax return as early as January or early February of next year, the IRS has a warning for you: wait until you have a set of "key documents" ” before doing so.

The IRS in a statement this month urged

to

, which contains information about income through third-party companies such as Venmo or PayPal.

“A little extra caution” could save time and effort, the IRS said, because if you don't report income on the 1099-K, you may owe money and have to file an amended return later.

“I would recommend waiting until at least the end of February or the beginning of March

,” said Albert Campo, a certified public accountant and president of Accounting Services in New Jersey.

His recommendation responds to the fact that the deadline for companies to send the 1099-K is January 31.

Form 1099-KGetty Images

That means filers should allow some time to receive the form, as delays or errors by the postal service can occur.

If you've recently moved, for example, these third-party companies that are supposed to send you documents may still have your old address and send the 1099-K forms to the wrong place, Campo said.

Why are many more filers receiving 1099-K forms?

Experts say many Americans will receive 1099-K forms for the first time this coming tax season. 

Before 2022, the federal reporting threshold for Form 1099-K was more than 200 transactions worth more than $20,000.

But the American Bailout Act of 2021 slashed the threshold (to $600) and even a single transaction can require the form.

Although the change focuses on business transactions such as payments to part-time workers, side jobs or the sale of assets, some filers may receive a 1099-K form for receiving personal transfers.

The IRS urges filers to contact issuers “immediately”

to correct errors or make adjustments to returns.

“The diligence and accuracy of the 1099-K forms now remains to be seen with this new lower threshold,” said Phyllis Jo Kubey, a New York enrolled agent.

[The Federal Reserve raises interest rates by half a point, thus slightly slowing down its fight against inflation as the economy cools]

“I'm concerned about taxpayers who do their own taxes and don't understand what's on their 1099-K and why,” Kubey said, noting that the form has created challenges for years.

“Now, that problem will affect more people.”

Have all the forms before filing the return

When filing your return, it is important to accurately report the details of all tax forms, such as the

from your job, the

forms for contract employees, and the

for personal income .

unemployment. 

Known as “informative returns”, these forms are sent annually to taxpayers by companies and financial institutions.

Your tax return must match these forms, as long as the data is correct.

When the IRS receives its income directly from filing companies, the system automatically detects mismatched returns.

That's why it's better to wait and include the right data, experts say.

Otherwise, you will risk potential errors and penalties later on.

Thanks to inflation, you may pay less in federal taxes next year

Oct 19, 202202:08

Kubey said it's easy to forget about investment income reporting forms.

One way to check which forms the IRS has received is to log into your online account to view your documents, the expert suggested.

“Unfortunately, the IRS does not release taxpayer wage and income transcripts until later in the year,” Kubey said.

However, "those transcripts are a fantastic resource for checking lost tax forms," ​​including discrepancies in third-party pay reports, he noted.