The IRS has a tax form for every occasion. One quick search on the IRS website will promptly bring up over 900 different results.
Most of these forms are for extreme niches, and you don’t need to know about them. But there are 10 forms you do need to be aware of before you file your taxes.
The other forms could also form part of your tax returns, though. Let’s look at ten of them.
- Form 1040 (You Really Need This One)
This is the form where you’ll concentrate on adding up all your streams of income and putting in all your deductions.
The longest version of this form is two pages, with 70 different lines you must fill in.
But what are the other 1040 forms for?
Form 1040EZ can be used for people who have extremely simple tax affairs. If you aren’t claiming any tax credits or deductions, this is the form for you.
Take note that your total taxable income must be under $100,000. You can fill out this form without the help of a professional since it’s so simple.
The Form 1040A, however, has a twist that comes with it. If you’re claiming some of the most common tax credits and deducting common things like student loan interest, you can use it.
Again, your taxable income needs to be below $100,000.
However, anyone can use the original Form 1040, even if they’re eligible to use the other two versions.
- Schedule A for Itemized Deductions
Schedule A is the primary form for those taxpayers who will be making several itemized deductions.
These deductions could include mortgage interest, charitable contributions, medical expenses, and property taxes.
Schedule A is great for reducing your tax bill, and hopefully, you’ll be using it on a regular basis.
- Schedule B for Investors with an Income
If you’re lucky enough to have investments delivering a regular income, you’ll be using the Schedule B form. It compiles all taxable interest and dividends.
You only need to use this form if it all comes to above $1,500. Remember that this only applies to taxable income. Anything you get from an IRA or 401(k) doesn’t count towards your taxable investment income.
- Schedule C for Freelancers and the Small Business
Freelancers can either use the full Schedule C or the much simpler Schedule C-EZ. Small businesses can also use Schedule C to report profits and losses. This form also has an area where you can deduct expenses related to growth and development. For example, you can deduct things like advertising and expenses for setting up your home office.
If your expenses come in at below $5,000, you can use Schedule C-EZ. However, if you have things like depreciation deductions and employees, you’ll need to use the standard Schedule C.
- Schedule D for Investors
Traders of stocks and bonds will need to use Schedule D. You’ll calculate all your capital gains and capital losses for the last tax year.
You can report both your good and bad investments. Remember that, as of this tax year, up to $3,000 of losses can be deducted from your total tax bill.
To complete this form, you’ll need to use the information from your 1099.
- W-2 for Hourly Workers
When you start a job, you’ll hand over a W-4 to your new employer. This tells the employer how much tax they need to withhold from your paycheck. The W-2 form is the one you’ll get from your employer around tax time (in January or February).
The W-2 form tells you everything you’ve earned, how much you contributed to the company pension plan, and the taxes withheld from your paycheck.
A copy of the W-2 also goes to the IRS, so it’s imperative that this information is correct before it gets sent.
On a side note, if you have a big tax refund, you should use a W-4 calculator to figure the withholding for the next tax year. There’s no need to give the government a free loan.
- Form 1098 for Students and Homeowners
Anyone with a mortgage will receive Form 1098 through the mail. This is a report of the interest you paid on your mortgage in the last tax year. This mortgage interest is deductible.
Students will likely receive Form 1098-T, where they report tuition payments. And if they’ve already graduated, they’ll receive Form 1098-E, which reports the interest paid on their student loans.
These are important forms because interest on mortgages and many student loans are deductible from your overall tax bill.
- Form 1099 for the Multitasker
If you have a lot going on in your life financially, you’ll be using the Form 1099, or one of its brothers. There are four main 1099 variations you need to consider.
These are 1099-DIV, 1099-OID, 1099-INT, and 1099-MISC. These are the forms for income you earned from someone other than your employer.
If you received any of these forms through the mail, the same form will have already gone to the IRS, so this needs to be accurate.
For example, 1099-INT is a report of any interest you earned on your investments. 1099-OID is the form you get when you buy a bond for under its face value.
And 1099-MISC is for all other forms of income you got from something other than an investment. This could be from freelance work done in your spare time.
- Form 1040X for Fixing Mistakes
Making an error on your tax returns is frustrating, but you always have a chance to fix that mistake. This is where Form 1040X comes in.
Request this form and fill it out. It needs to be submitted through the mail rather than online. Make sure you take a copy for your records in case the form gets lost. You should use tracked mail so you can monitor it all the way.
If you need to pay more than you did before, this can be done online. You’ll also get a direct deposit if you discover the IRS owes more than initially expected.
- Form 4868 for People Who Need an Extension
You may need more time to file an extension. An extension Form 4868 must be filed by the April deadline put in place by the IRS. You can even extend until October if you’re willing to pay.
But to get an extension, you need to send in at least a little bit of the money you owe, based on a reasonably accurate estimate.
And if the amount you owe is larger than the amount you thought before the extension, you’ll have to pay interest on this amount.
For every month or partial month you’re late, the IRS will add 5% of the amount due as a form of penalty. The moral of this article: File swiftly and file accurately to avoid getting into trouble!