Rogers Financial Agency

Tax Filing Season Begins

The 2024 Tax Filing Season opens today, January 29th, 2024, for your 2023 returns. Here are some tips to make your tax filing season easier.

Gather Documents Showing Wage, Business And Other Income:

If you work as an employee, you should receive a W-2 from your employer(s) by early February, showing your earnings for the year and the total tax withheld from your paychecks. If you are self-employed (including gig economy work) or own a business, you may also receive 1099 forms from your clients showing fees paid to you.

Interest and dividend income, along with royalties from past work, are also reported on 1099 forms. Recipients of unemployment benefits and/or taxable Social Security benefits should receive a year-end statement detailing these payments as well. Store all of these documents with your tax records.

Organize Records Of Other Potentially Taxable Transactions:

The sale of major assets like stock, a house or any other “big ticket” item may yield a taxable capital gain. Many cryptocurrency transactions (such as buying and selling Bitcoin) also have tax implications, since the IRS classifies cryptocurrencies as property. Make sure you have complete records of all your significant financial and property transactions during 2023.

Start Early:

Assemble your records and file your taxes early. If issues come up, you'll have much more time to resolve them. A tax professional can help you with identifying and organizing your documents as well as filing your tax return.

Filing Deadline for W-2 and 1099 Forms

Taxpayers who paid employees or independent contractors in 2023 are reminded to file all required payment reporting forms by January 31, 2024.

If you operate a business and pay employees, you generally must file a Form W-2 for each employee with the Social Security Administration (SSA) by January 31. You must also send each employee a copy of their W-2

January 31 is also the deadline for 1099 forms if you are required to file 1099-MISC and 1099-NEC forms.

If you are an employee, you should expect to receive your W-2 from your employer soon, if you have not received it already.

Delayed Implementation of New 1099-K Rules – Did You Know?

Under a new rule enacted in 2021, third-party payment processors must issue a Form 1099-K to any individual who receives $600 or more in payments for goods or services during a year. However, IRS officials have noted that this rule could potentially cause widespread confusion, since many transactions completed through online payment platforms have no tax impacts. Examples of non-taxable transactions include settling up with friends and selling used personal items.

Therefore, the IRS will not enforce the new rules for tax year 2023. Instead, third-party payment processors may operate under the prior rules, only sending 1099-K forms to users who received over $20,000 in payments through over 200 transactions. In addition, 2024 will serve as a phase-in year, with the 1099-K reporting threshold set at $5,000.

Regardless of 1099 reporting rules, payments received through third-party platforms for self-employment activities or selling goods for profit are generally taxable income. A tax professional can help you properly report your 2023 income, and prepare for the future implementation of a lower threshold for 1099-K forms.