What tax form does my client use to claim unreimbursed employee business expenses?
The IRS will let your client deduct employee business expenses that their employer will not reimburse them for. The form they need to fill out to claim these write-offs is IRS Form 2106, Unreimbursed Employee Business Expenses. Among the most common deductions claimed on this form are the use of their car to perform their job, work-related travel expenses and business meals. They can choose to file a regular Form 2106, or they may qualify for the shorter and simpler Form 2106-EZ.
How can my client tell if they should use a 1040EZ for filing their tax return?
Form 1040EZ is the simplest of the forms to use. They can use Form 1040EZ if they meet all of the following requirements, else they must use a Form 1040 or 1040A:
How can my client tell if he/she should use a 1040A to file their tax return?
1040EZ is the simplest form to use while 1040 is the long and more complicated form. 1040A lies somewhere in between these two extremes. To use it, your client's total taxable income must be less than $50,000, but their taxable interest and dividends can be more than $400. This form does not allow them to itemize, but it does permit them to deduct an IRA contribution and claim the child-care credit."
How can my client tell if they need to use a 1040 "long form" to file their tax return?
Of the three tax forms, the 1040 are the longest, most used and least simple of all. This is the form that allows for itemized deductions to be claimed. Your client will be required to fill out the 1040 if their taxable income is $50,000 or more, or they receive certain types of income such as rent or capital gains. In order to itemize on the 1040, they must fill out an additional form called Schedule A, which will help them figure out the value of their itemized deductions.
If my client sells investments, what tax forms will they receive from their brokers?
If your client sold property such as stocks, bonds or certain commodities through a broker, the broker should provide them with IRS Form 1099-B, Proceeds from Broker and Barter Exchange Transactions. They should receive the form by Jan. 31. It shows the gross proceeds from sales for the previous year. A copy will also be sent directly to the IRS.
What tax form will my client receive if they invest in a partnership?
If they have invested in a partnership, its managers will likely send them Internal Revenue Service Form 1065, Partner's Instructions for Schedule K-1. The form is designed to help them report their share of the partnership's income, credits, deductions and tax-preference items. They don't have to attach Form 1065 to their income tax returns. Keep it for their records.
What happens if my client doesn't fill out a W-4 form when they start a new job?
The IRS expects everyone to fill out IRS Form W-4, Employee's Withholding Allowance Certificate, soon after they start a new job. The W-4 helps to calculate how much tax should be withheld from each of their paychecks. If they don't fill out a W-4, the IRS requires their employer to withhold taxes at the highest rate, which is as a single taxpayer with no allowances for dependents. If the employer failed to withhold taxes at this rate, the IRS could penalize him.
What tax schedule do self-employed individual fill out?
Nearly every self-employed person must complete Schedule SE, Self-Employment Tax, and attach a copy to their federal income tax return. There are two version of the Schedule SE, the Short and the Long versions. It's usually better to file the latter, even though it will take a bit longer to complete. Both are designed to help you determine how much self-employment tax you must pay.
What tax form should my client use to report nondeductible IRA contributions?
If they have a nondeductible Individual Retirement Account (IRA), they must still report any contributions to it to the IRS by completing IRS Form 8606, Nondeductible IRAs (Contributions, Distributions, and Basis). They must also file Form 8606 if they have received IRA distributions during the tax year and they have ever made nondeductible contributions to any of their IRAs. A Form 8606 must be completed and filed with the IRS even if they don't have to file a tax return for the year in question.
What tax form will my client receive if they have received interest income?
Interest income is generally reported to them on IRS Form 1099-INT by banks, savings and loans, and other financial institutions. This form shows them the interest they received during the year. They must declare all of their interest earnings even if they do not receive a Form 1099-INT.
What tax schedule should my client use to report interest and dividend income?
If they received more than $400 in dividend or interest income for the year, their tax return will have to be accompanied by Schedule B, Interest and Dividend Income. Schedule B is broken down into three parts. Part I is where they list all their interest income. Part II is where they list all the information about their dividend income. Part III asks about any foreign accounts or foreign trusts that they might be involved with.
What tax schedule should my client use to report capital gains and losses?
If they sold or exchanged any securities or certain other property during the tax year, they will probably have to complete Schedule D, Capital Gains and Losses. Schedule D can be highly annoying, especially if they are an active investor who buys and sells often. Beginning in 1998, if they sell their principal home and can exclude all of the gain (up to $500,000 for married couples filing a joint return and $250,000 for single filers), they do not need to report the sale on their tax return. If they cannot exclude all of the gain, they must report the sale on Schedule D.
What tax schedule should my client use to report supplemental income and loss?
Schedule E, Supplemental Income and Loss, is one of the IRS' most difficult forms. Unfortunately, they will probably have to fill it out and attach it to their federal tax return if they were involved with rental real estate, invested in a partnership, had certain other investments or income, or were involved in a trust or "S corporation."
What tax form must my client complete to amend their tax return?
They should use IRS Form 1040X, Amended U.S. Individual Income Tax Return, to correct a Form 1040, Form 1040A or Form 1040EZ that they have already filed. The IRS says they should file a 1040X if they did not report all of their income, they claimed deductions or credits they should not have claimed, or they should have claimed a different filing status. If they're thinking of filing a 1040X because they forgot to claim a legitimate deduction or credit, make sure the refund would offset the time and cost involved in filing.
Where can my client find IRS tax forms and publications?
If the IRS does not automatically mail them all the forms they need, they can download many of the forms and publications they may need from our website. In addition, many post offices, public libraries and banks keep a stock of tax forms on hand.
What tax form will my client receive if they are paid investment dividends or distributions?
If they own stock or some other investment that pays more than $10 in dividends or distributions over the course of a year, the company that pays them the money must also send them IRS Form 1099-DIV. They must declare all the dividends and distributions they receive even if the company fails to send its 1099-DIV. A copy is also sent to the IRS.
What tax form should my client use to request an extension for filing?
They must complete IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return by April 15th. They do not have to explain why they are asking for the extension and the IRS will contact them about their extension only if their request is denied. Remember that while they are not required to send a payment with Form 4868, if they don't pay at least 90% of their tax bill by April 15, they'll have to pay penalties and interest when they do file the return.
If the 4-month extension does not give them enough time, they can ask for additional time later but they will need a good reason and it is subject to IRS approval. To ask for the additional time, they must either: 1) file Form 2688, Application for Additional Extension of Time To File U.S. Individual Income Tax Return, or 2) explain their reason in a letter.
What tax form should my client use if they need to pay in installments?
If your client cannot pay the full amount they owe the IRS, they can request to make monthly installment payments using IRS Form 9465, Installment Agreement Request. The form allows them to choose the date their monthly payment is due. For example, if their rent or mortgage payment is due on the first of the month, they may want to make their installment payments on the 15th. Remember, however, that they will be charged interest and possibly a penalty on the amount that they have not paid by April 15.
Why did my client receive a Form 1099-R?
If they receive a distribution from a pension plan, IRA or other retirement accounts, annuity or insurance contract, the company that makes the payment will send them a Form 1099-R.
What tax form should my client receive to tell them their total wages and tax withheld for the year?
Internal Revenue Service Form W-2, Wage and Tax Statement, is a statement from their employer of the wages and other compensation paid to them in a given year and the taxes that were withheld from their pay. If they have more than one employer, each one is responsible for sending they its own W-2. They must attach one copy to the front of their federal tax return, one to their state tax return, and keep one for their own records..
What tax form should my client use to pay estimated tax?
IRS Form 1040-ES, Estimated Tax for Individuals, is the form they must use to pay their estimated tax. They pay estimated taxes when they have income that is not subject to withholding.
