Internal Revenue Services (IRS) have various tax forms which are for different tax files and tax returns. Whether you have a startup or a profitable company, the IRS has paperwork that must be considered when filing tax returns. To run a hassle-free business, with a smooth tax return and filing, you need to know these forms and their purposes. It will help you understand which tax form is for your use. There are hundreds of forms available but you don’t need to know about them all since most are for very specific purposes. However, there are the top 8 IRS tax forms that you need to know about to avoid form corrections.
1. Form 1040-EZ
If your total taxable income is less than $100,000, and there are no other complications then you can file the 1040-EZ form. It is a very simple and straightforward tax form that is commonly used by those without any complicated tax return situations. Although this form is easy and you should be able to file it on your own, you must ensure you check all the requirements. To file a 1040-EZ form, one needs to be under 65 years of age and must have no dependent claims. There are other such requirements that apply when you file the 1040-EZ form.
2. Form W-4
If you are an employee working in an organization, you will have to file a W-4 form. Unlike other tax forms, you don’t need to submit this with your annual tax return. Instead of sending it directly to the IRS, you must submit the form to your employer. This form is used by employers to determine the amount of tax to withhold from an employee’s paycheck.
The data you provide to your employer in the W-4 form is calculated by the employers, and the tax is paid to the IRS. Remember that you would need to file a fresh form if you have changed employers. You can also file a new form if you have additional claims such as a new dependent (a baby).
3. Form 1040
Although form 1040 is a very common IRS tax form, it is more complicated than form 1040-EZ. This form is filed by most tax filers for their tax return. To file this form, you need to meet the requirements of age and gross income. For individuals with no taxable incomes, this form is suitable for filing tax refunds, claims for credits, and expenses.
4. Form 1098
The IRS sends you form 1098 if you are paying mortgage interest. This form is only applicable if you pay above $600 as interest. This form is mainly used for reporting the amount of interest, insurance, and property taxes paid.
There are also other variations of this form, which are used for different purposes. Form 1098-E is issued for student loan interest. It records the total tax amount paid. Another variation of this form is 1098-T. Form 1098-T is used for educational expenses and tax records.
5. Form 4868
Tax return periods can be extended. This would allow you enough time to do all due payments and come clean. Form 4868 is used to request an extension of the tax period. The tax amount you owe to the IRS must be sent along with this form or a part of it. Failing to pay the estimated amount below the actual payment amount, might lead to charges and penalties for you. These charges will cover penalties on due amount and interest charges.
6. Form Schedule C to Form 1040
For entrepreneurs or self-employed individuals, you are required to file Schedule C of Form 1040 to report your profits of business or loss. This includes business-related expenses like travel, supplies, wages, etc. This form is for sole-proprietors.
7. Form 1099-MISC
This form is a replacement for form W-2 for self-employed individuals. If you are a freelancer or contractor, you need to file form 1099-MISC for your tax return. This form is received from every client along with their payments for the services provided.
8. Form 1040X
It’s common and human to make mistakes when filing tax returns. To correct the mistake, you can file a revised tax return. You can file this using form 1040X. The correct format would be to attach all the prior documents including the original tax return file.
Final Words
Failure to file proper IRS tax forms could result in penalties and challenges. It’s crucial that you know about these forms, and which one should be used.
