During the tax filing process, it is conclusive that a person needs to choose the correct form suitable for their income and employment type. IRS has several documents you must fill out based on your income, employment, and tax benefits.
For US residents, knowing which tax forms solve what kind of requirement is essential; based on that, you can choose which forms to fill during your tax filing process. This blog will discuss the various forms and how they are effective for a smooth tax return process.
- Form 1040
It is the basic form that every US taxpayer needs to fill. In this form, a taxpayer provides their basic details about their income, deductions, credits and how much tax liability they have to the authority. A tax law attorney can help you through this process and guide you on how to verify income.
In this form, one must provide their social security number, marital status, and other information about the household. In this form, one must verify the spouse or the number of dependents in the family.
Here, you must also provide the various types of income you have earned throughout the year. You also need to mention the sources of your income.
2. Form W-2
Form W-2 is a comprehensive form that provides the income breakdown throughout a financial year. It includes salary, wages and other forms of compensation that must be provided to the IRS. It is essential to understand whether or not the individual has withheld tax or owes a refund.
It also tracks Medicare taxes and helps justify an employee’s overall tax liability. The W-2 form is a verification tool the IRS can use to trigger any inquiry or audit. IRS tax lawyer in California or at your location has the expertise to deal with any queries from the authorities, and thus, it is a good thing to hire one when you have to serve an audit notice.
3. Form Schedule C
It is an essential form for business owners to report their income and expenses. It mainly caters to small businesses where the person is self-employed or a sole proprietor. It includes the business’s gross income, totalling all the amount generated from selling a particular product or service. It is the process where you also show the expenses and verify whether you have made a net profit or loss in that financial year.
Through this form, self-employed people prove their income and thus come under the tax authority, which helps them to calculate their tax liability. Tax lawyers in Beverly Hills, or the best lawyers from your location, can help you to find deductions that you can state to reduce the tax liabilities.
4. Form 8862
Through this form, one can get the “Earned Income Tax Credit” (EITC), a tax benefit designed to help moderate-income individuals and families. It is a credit-based initiative where authorities reduce the tax amount based on your earned income and family size.
These are the forms that help individuals to navigate the tax season accurately and to stay on straightforward terms with the IRS.