Individual Tax Planning
All the Tax Forms You Need to Know as an Individual
There is a seeming universe of tax forms, schedules and publications that individuals must sort through to file their personal tax return. Fortunately, if you know the main forms most taxpayers use, you can navigate your way through the filing process with ease. Below are some key forms and schedules you should consider when preparing your tax return.
There are multiple versions of Form 1040, which is the U.S. Individual Income Tax Return. These variations include 1040EZ and 1040A. Form 1040EZ is the simplest version of the form, and it is designed to expedite the filing process for single individuals or married couples filing jointly that have no dependents. Form 1040A can be used by any of the five filing statuses and is also simplified compared to the regular Form 1040. Knowing which form to use can save you time preparing your taxes.
If you need an extension to file your tax return, you will need Form 4868, which is an application for an extension of time to file. This form can gain you an extra six months to file your return. However, any tax liability you owe is due at the end of the normal filing period. To avoid penalties and fines, it's important to pay your taxes and file by the applicable deadlines.
Wages of hourly and salaried employees are reported on Form W-2. This wage and tax statement is a major component of your tax return, because it serves as support for the income and taxes you report on Form 1040. Form W-2 has amounts such as gross wages, income taxes already remitted to the government, and amounts contributed to 401K plans. Federal and state tax returns cannot be completed without entering your W-2 information.
Interest income from bank accounts and other financial institutions or instruments is reported on Form 1099-INT. This form has sections for gross interest, taxes withheld, early withdrawal penalties and other pertinent information related to interest income. This form and other 1099s that report different types of supplemental income are critical to understand, because they impact the accuracy of your return and any potential penalties you may pay for the understatement of tax due.
Schedule A (Form 1040)
You are given the option to take the standard deduction on your tax return or to itemize your deductions on Schedule A. Itemizing deductions can include charitable donations, medical expenses, state and local taxes, property taxes and other items subject to statutory thresholds. Often-times it is advantageous just to take the standard deduction, but it’s important to know when to itemize to reduce your tax liability.
Schedule C (Form 1040)
To report profit or loss from a business, you will need to use Schedule C and enter net income or loss on your Form 1040. You will need to reference your accounting software or your financial tracking spreadsheets to complete this schedule. This schedule is straightforward, and its common among IRS tax forms for individuals .
While individual tax forms may seem daunting, there is 1040 Form help. Once you learn the basics, you can sift through 1040 Form information and feel confident preparing your tax return. If your individual tax forms are complex, it may be time to seek the assistance of a professional tax preparer.
Channika Daniels, EA
New Beginning's One Stop Tax Relief & Preparation is available year round to help with any tax situation you may have. We are based in Phoenix, Arizona but licensed to represent clients from any state within the US, before the IRS. We can assist you with your tax return preparation, tax problem resolution, and audit needs.
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