The Top IRS Tax Forms You Need to Know About
Did you know that you will get over 900 results if you search the IRS website for tax forms? That’s an overwhelming number of forms just waiting to get filled up. Fortunately, you do not need them all to file your taxes. A few important ones should do the trick. Irrespective of the number of times you have already filed your tax returns, you must keep the following forms on your radar. Make sure that you are collecting the right forms and also sending them all to the respective authorities.
1. Form W-4
Let’s start with the first form you will have to fill up that concerns the taxes you pay but does not get sent to the IRS during the tax return. You generally receive the W-4 from your employer. You fill it up and give it back to the employer. With the W-4, you tell your employer how much of your gross paycheck are you willing to withhold to be paid as taxes to the authorities. You need to file a new W-4 with every change in your employer. You also need to update the W-4 if you want to increase or decrease the amount withheld.
2. The 1040
IRS Form 1040 is the most common form that American taxpayers fill up every year. This is where you declare your annual income, claim tax deductions and credits, and arrive at the tax payable or the refund owed to you by the IRS. Form 1040 further bifurcates into four schedules named A, B, C, and D. Among them, Schedule A is the most common where you list your itemized deductions in case you did not opt for standard deduction in 1040. In Schedule B, you list bank interest paid to you that is taxable if the net figure is over $1,500. Schedule C is to report profit/losses by self-employed workers. And Schedule D is to report your income from shares and bonds.
3. Form W-2
If you are employed by an organization, you will have to attach the Form W-2 with the 1040. Your employer will typically send you the W-2 during January or February that will list your net paycheck, the contribution made towards taxes, the amount put into the organization’s retirement plan, and more. A copy of this also goes to the IRS, so make sure that you surely attach this form while filing your tax returns come April. Form W-2 is like year-end details of your net salary and deductions that you decided to make with the W-4 initially.
4. Form 1099
Although many believe Form 1099 is only applicable for self-employed workers, it might apply to you as well in the era of the gig economy. Most Americans now have a side hustle along with their full-time employment that adds another source of income to the family. Form 1099 asks you to list such sources of extra income that you may have earned apart from your regular paycheck. The 1099 branches out to 1099-MISC, 1099-DIV, 1099-OID, and 1099-INT. 1099-MISC is where you show you extra income from the side-gig where the others relate to dividends earned, earnings from bonds, and interests earned respectively.
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