If you're like most people who file annual tax returns, there are a plethora of forms to contend with. Here are six of the most crucial tax forms.
1. Individual Tax Return Form 1040
The IRS tax form is used by most US filers as their primary means to submit their annual taxes. Depending on your age, filing status, and gross income, one may need to utilise this form. Even if you are qualified for a tax refund or credit but do not have any taxable income, use this form.
Although Form 1040EZ is easier, it allows you to itemise deductions and claim a wide variety of expenses and tax credits.
2. Interest Income Form 1099-INT
Banks and other financial organisations that pay interest on deposits may give you a Form 1099-INT. The interest on the form is usually taxed. You must pay it and record it on your tax return.
Your return must contain all sums on the form. If the total taxable interest exceeds $1,500, you must also submit a Schedule B listing all payers and the amount of interest received.
3. Schedule C, Profit or Loss from Business, Form 1040 (Sole Proprietorship)
If you are self-employed, you may need to submit Schedule C to document the gross profit or loss from your firm. Insurance, travel, meals and entertainment, taxes, office supplies, labour, and other business-related costs are all covered in the expenditure categories.
4. Income from Other Sources Form 1099-MISC
This form is frequently provided by each client who paid a self-employed person throughout the course of the year. Because your tax return reveals your total earnings, you must include such money. This form replaces the Form W-2 you would have gotten as a regular employee or as a freelancer or independent contractor.
Other types of revenue such as prizes, honours, and fishing boat earnings, are also included on the form 1099-MISC.
5. Form W-4, Employee Withholding Allowance Certificate
Form W-4 is neither sent to the IRS nor is it included with your annual tax return. You might also provide it to your employer so that they know how much tax to take from your gross wage and transmit to the proper taxation authorities. This form includes a worksheet that you may use to calculate the amount.
If you change jobs, you must file a new W-4. If your circumstances change, such as having a child and claiming a new dependent, you can also file a new Form W-4 to your existing employer.
6. Form W-2, Wage and Tax Statement
People often confuse Form W-4 and Form W-2. Your employer gives you Form W-2 at the end of the calendar year to show the total amount of tax they withheld from your paychecks. These taxing entities match up the amounts you claim as income with the amounts your employer reports they paid you. Because your employer sends this form to the IRS, you do not need to file it with your tax return.
Whatever papers you must submit, make sure you use the correct tax year versions. For example, you should file your 2021 tax returns during the 2022 tax season. Remember that your circumstances may change. Also, you may need to complete more or fewer forms each year.