Income--The IRS Knows

By KATHY M. KRISTOF

March 7, 1995 12 AM PT

The Internal Revenue Service has gotten much better at determining whether the income you’ve reported on your tax return includes all the income you’ve received during the year.

That’s because a host of companies--ranging from your employer to your bank--are now required to tell the IRS (and you) just how much you’ve earned from wages, interest, investments, awards and an array of other items.

These amounts are then matched by computer to the appropriate lines for reporting income on your Form 1040. When there is a mismatch, the IRS computer pops out a notice of deficiency or overpayment.

On occasion, there may be good reason for a mismatch. Certain types of income--such as interest earned on savings bonds--are not taxable to all recipients. But if this type of income is matched by computer, you’ll save yourself a truckload of trouble and worry if you note it on your tax form.

How do you do that? You can attach a note or write on the dotted lines. Or, in some cases, you add the figure into the taxable column and deduct it later (for certain types of investment income, for example).

Here is a list of the types of income and forms that are used to report income to you (and the IRS) and that are subject to the computerized matching program.

* K1: partnership income

* W-2: income from wages, salaries and tips

* 1098: mortgage interest statements

* 1099-A: information on acquisition or abandonment of secured property

* 1099-B: proceeds from broker and barter exchange

* 1099-DIV: dividends and investment distributions

* 1099-G: government payments

* 1099-INT: interest income statement

* 1099-MISC: rents, royalties, prizes, awards

* 1099-OID: original issue discount notices

* 1099-PATR: taxable distributions received from cooperatives

* 1099-R: pensions, annuity, profit sharing and insurance distributions