I Lost My Tax Documents… Now What?

By Damian Davila on 16 December 2015 0 comments

It's human to make an error. Unfortunately, the Internal Revenue Service (IRS) isn't so forgiving of tax filers' mistakes, including incomplete forms and missing documents. For example, forgetting to include your taxpayer identifying number, such as your Social Security number, costs you $5 each time it's missing from required returns and statements.

Even heftier fees apply when you forget to include necessary tax documents with your filing. Are you missing documents or other needed information for your upcoming taxes? Here is what you can do to fix this before the filing deadline comes in April 2016.

1. Prior-Year Tax Information From the IRS

You can request current and the past six years tax return transcripts and tax account transcripts from the IRS.

While a tax return transcript shows most line items, including accompanying forms and schedules that were originally filed, it will not include changes made afterward. To request an updated return that includes those changes, you need to request a tax account transcript.

To request tax return or tax account transcripts, you can:

The IRS doesn't charge a fee for transcripts that are up to three years old. However, the IRS does charge $57 for every actual copy (different from a transcript) of a previously processed tax return. Actual copies are generally available for the past six years. Victims of a zone declared as a federal disaster by the President may have this fee waived.

2. Forms 1099 for Interest and Dividend Income

You can retrieve missing forms 1099-INT, Interest Income and 1099-DIV, Dividends and Distributions by requesting them from the bank or financial institution that issued them.

The deadline for most forms 1099 is January 31st, so if you haven't received them by that date, you may need to wait a couple more days. Remember that you don't usually need to attach these forms to your return. As long as you can retrieve the necessary information from the financial institution, you can put together your return. For example, some financial institutions may offer you a summary or key data from those forms in an online portal.

3. Forms 1099 for Miscellaneous Income

Another very important form from the 1099 family is the 1099-MISC, Miscellaneous Income. This is a key form for sole proprietors, freelancers, and independent contractors, who receive most of their income from clients or part-time employers rather than full-time employers.

If you receive at least $600 as payment from a single individual or company within a year, you need to have a Form 1099-MISC from that individual or company. While you don't need to attach those forms to your return, they would be essential in case of an IRS audit. Users of Schedule C to itemize deductions are almost three times more likely than a corporation to receive an audit. The IRS would slap a 25% inaccuracy penalty on top of applicable taxes and interest to wrongdoers. (See also: 8 Tax Return Mistakes Even Smart People Make)

Add up your invoices or paystubs from everyone that you have received a payment from and, if that total adds up to $600 or more, double check that you have a Form 1099-MISC. If you don't have one, request one from that individual or institution.

4. Receipts for Donations

Cash and non-cash donations are some the most common ways to reduce your taxable income. Depending on the size of your donation, you may be off the hook to provide documentation. If your cash or non-cash donation is less than $250, a paper or printout of an online statement can suffice as proof of your donation.

However, for donations greater than $250 you need to get a written contemporaneous acknowledgment for each one of them. For non-cash donations worth $5,000 or more, you'll also need a qualified appraisal of the items.

Some qualified nonprofit organizations accepting cash donations provide updates on your donations on a rolling basis, so you may receive one in the mail without doing anything. In most cases, you need to contact the recipient of your donation to request a total if you're unsure of how much you have donated for the year.

Organizations, such as Goodwill, that accept non-cash donations generally don't replace receipts when those documents are lost lost or stolen. If the market value of the donated items is less than $500, you should be fine under most circumstances by itemizing the items in the appropriate schedule.

A best tax practice is to keep a digital copy of your donation receipts in case you misplace them.

5. W-2s

It's possible to get past (up to six years) and current copies of your Form W-2, Wage and Tax Statement directly from the IRS following the directions outlined above. However, it takes the IRS five to 10 days to fulfill online requests and up to 30 calendar days to fulfill requests via fax or mail.

For some taxpayers, all that they need to file a 1040-EZ return are their W-2 forms. When you're so close to the April 15 deadline, waiting more than a day may not be an option. In those circumstances, check directly with your HR department about a missing W-2. Most employers are able to provide you a replacement faster than the IRS, and some of them even offer retrieval directly from an online portal, such as Workday, UltiPro, or BambooHR.

What If I Can't Get Any of My Tax Documents on Time?

To buy yourself some extra time, you can file an extension by April 15th. This would extend your filing deadline until October 15th. Remember that you're still liable for the applicable late filing penalty if you owe taxes (5% of the amount due for each month or part of the month your return is late).

In 2016, tax-filing procrastinators have some good news, because most taxpayers will have until Monday April 18, 2016 to file federal taxes. Residents of Maine and Massachusetts are extra lucky and have until Tuesday April 19, 2016 to complete their returns.

Still, don't wait until the last day and gather those missing tax documents as soon as possible.

How did you deal with the loss of tax documents?

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