IRS Issues Several Reminders for 2023 Tax SeasonArticles/News, Offshore Account Update
Posted on January 31, 2023 | Share
Now that tax season is here, the Internal Revenue Service (IRS) is issuing several reminders for taxpayers. Errors and omissions on taxpayers' returns can lead to substantial penalties, and if an IRS audit uncovers evidence suggesting that a taxpayer has intentionally underreported or underpaid its federal tax obligations, this can lead to criminal prosecution in some cases. As a result, all taxpayers need to prioritize reporting compliance in 2023—starting with the basics.
The IRS typically issues several News Releases with reminders for taxpayers throughout tax season (and throughout the year). Here are some of the reminders it has issued so far:
Start By Gathering All Necessary Documentation
For some taxpayers, getting ready to file their annual returns is as simple as making sure they have their W-2. But, for many others, ensuring that they have all of the documentation they need is a much more challenging process. For example, along with their W-2s, many taxpayers will also need documentation such as:
- 1099s for independent contractor and gig work
- Form 1095-A, Health Insurance Marketplace Statement
- Form 1098, Mortgage Interest Statement
- Documentation of state and federal tax refunds
- Documentation of healthcare, childcare and education expenses
- Retirement, pension and annuity income documentation
- Rental income documentation
- Gambling and gaming income documentation
- Cryptocurrency account statements
- Securities and brokerage account statements
- Trust statements
- Offshore bank account statements
- Business expense receipts
- Documentation of disaster relief funds, PPP loan forgiveness and other government benefits
Even these are just examples. Taxpayers have an obligation to ensure that they accurately report all of their taxable income and reportable assets, and this can involve gathering numerous forms of documentation before starting the process of determining which forms to file and preparing their returns.
Report All Income from All Sources
The IRS is also reminding taxpayers of their obligation to report all income from all sources on their annual returns. For example, the IRS notes that along with ordinary employment and business income, taxpayers may also need to report income from the following:
- The sale of goods and services online
- Investments (including real estate, securities and cryptocurrency)
- Part-time and seasonal work
- Self-employment and other business activities
- Services provided through mobile apps
While cryptocurrency had a down year overall in 2022, taxpayers who realized gains from individual transactions during the year must still report their income from these transactions on their returns in 2023. Of course, cryptocurrency investors can (and should) claim their losses as well—though they must be able to substantiate their claimed losses in order to avoid unwanted scrutiny from the IRS.
Watch Out for Tax Preparation Scams
In 2023, the IRS is once again warning taxpayers to watch out for tax preparation scams. This is a perennial issue. Crucially, while the IRS recognizes that tax preparation scams are a very real problem, it also makes clear that taxpayers are ultimately responsible for ensuring that they file accurate returns on time.
Contact Thorn Law Group in New Jersey
The attorneys at Thorn Law Group represent individual and corporate taxpayers in all tax-related matters involving the IRS. If you need help to avoid civil or criminal penalties, call 201-842-7696, email email@example.com or contact us confidentially online to schedule a consultation with tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.