Tax Filing: Are You Ready?

December 4, 2023
The sooner you start gathering your tax forms and getting ready to file, the less stress you're likely to feel as Tax Day approaches.

If you're like most taxpayers, you probably have a file or folder filling up with tax forms and receipts. While it might be tempting to put off the day of reckoning, Tax Day will be here before you know it. The sooner you start organizing your return, the less stress you're likely to feel as the tax filing deadline approaches. 

"Don't wait until the last minute when it comes to your taxes," said Hayden Adams, CPA, CFP®, and director of tax planning and wealth management at the Schwab Center for Financial Research. "If you can get a head start, you can break the job up into smaller, more manageable tasks and avoid a lot of the usual anxiety."

Here's a handy reminder of what you'll need to prepare, along with some tips for avoiding mistakes.

Common tax forms

Filing taxes usually goes hand in hand with tax forms—whether paper or electronic. Depending on your individual situation, you may receive a lot of them. That's reason enough for starting early—if you find you're missing one, you'll want to give yourself plenty of time to track it down. 

Here are some of the most common IRS forms you may need for your taxes:

  • W-2: Used by employers to report your total annual compensation, payroll taxes, contributions to retirement accounts, and other wage information.
  • 1098: Used by lenders to report mortgage interest, mortgage insurance premiums, and any points on the purchase of a new home paid during the tax year.
  • 1098-E: Used by lenders to report interest paid on student loans.
  • 1098-T: Used by educational institutions to report payments for qualified tuition and related expenses, certain adjustments, and scholarship or grant amounts.
  • 1099-B: Used by financial institutions to report capital gains.
  • 1099-DIV: Used by financial institutions to report dividends.
  • 1099-INT: Used by financial institutions to report interest income.
  • 1099-MISC: Used by businesses and payers to report royalties, rents, and other miscellaneous income.
  • 1099-NEC: Used by hiring agencies or companies to report wages for independent contractors and nonemployees.
  • 1099-R: Used by financial institutions to report withdrawals from tax-advantaged retirement accounts.
  • SSA-1099: Used by the Social Security Administration to report Social Security benefits.

When you receive each form, check it for errors. If you find any, ask the responsible party to correct them as soon as possible or your tax return could be held up.

Planning to itemize?

If your deductions exceed the standard deduction for 2023—$13,850 for single filers, $20,800 for heads of household, and $27,700 for joint filers—it makes sense to itemize them so you can keep more of your earnings.

That requires proof in the form of receipts and other documentation to support your figures. You don't have to submit the receipts with your tax return, but you'll need them in case you're audited by the IRS.

"You don't want to be caught without them, so be sure to save them for at least seven years," Hayden said. "If you lost or didn't save some of this information, don't fret—you may be able to use other documents, such as credit card statements or canceled checks, as evidence during an audit."

Not quite ready?

Sometimes filing on time just isn't possible. Unexpected events can interfere with your ability to file, as can delays in receiving tax forms.

Your 2023 return will be due April 15. If you think you might miss the deadline, you can file for an extension, giving you until October 15 to complete your return. But keep in mind, you still need to estimate and pay any taxes you owe by Tax Day to avoid possible penalties.

Avoiding mistakes

Finally, be mindful of common issues that often trip up taxpayers. Hayden, who spent eight years at the IRS before joining Schwab, said he saw taxpayers make the same mistakes over and over again. Using tax-preparation software can increase the overall accuracy of your return and help identify all the deductions you may be entitled to. But even the best tax software won't catch basic inputting errors.

If you realize you filed your return with a mistake or forgot to include something, file an amended return as soon as possible. It's also never a bad idea to call for back-up—consider enlisting a tax professional to answer specific questions, give your return a second look, or even prepare it from start to finish.

This information does not constitute and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for their own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.