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Multiple Income Streams? Here’s How to Tackle Forms for Tax Filing

Forms for Tax Filing

Multiple income means multiple tax forms and the agitation of filing them right. Its a lot to handle! On top of that, not having knowledge of these forms can be overwhelming. But stress has no roam in this blog. We will cover everything from basic tax forms to details of different forms and schedules. So continue reading, and you’ll be ready to face tax season without losing sleep!

What are Tax Filing Forms?

Tax filing forms are official documents used to pay taxes to local and federal governments. These forms can be for:

  • Income taxes
  • Capital gain
  • Property taxes
  • Payrolls
  • Excise taxes
  • Estate and gift taxes

In the United States, the IRS (Internal Revenue Service) is a major tax authority that receives income taxes.  Additionally, there are local tax departments in different states of the USA. So, being a business or individual resident, you must check the tax requirement in your state. 

Importance of Using the Correct Form:

Do you know the United States contains more than 33.2 million businesses as of 2024? All they have are different sources of income, expenses, and regulatory requirements. That’s why some simple forms can’t define all the tax requirements. The IRS has more than 800 forms to deal with taxes. These forms for tax filing can feel overwhelming due to their complexity. However, these forms are crucial to staying compliant with tax laws. Here is why you need to file the correct form:

  • Legal Compilance: Filing your tax forms correctly ensures you are actively following government rules and regulations for taxes. It will help you to manage a healthy tax record and avoid any penalties. 
  • Financial Benefits: If you have overpaid your taxes, accurate filing can lead to refunds. Moreover, properly claiming your tax deductions and credits lowers your tax liabilities. Ultimately, it is a financial plus for you!
  • Future Planning: As an individual, if you plan for an IRA (individual retirement account), accurate filing can help you estimate your financial conditions nicely. Furthermore, understanding your tax liabilities can help you make informed investments for the future. 
  • Government Service: Your funds are used to aid public services provided by the government, such as government hospitals, educational institutions, and infrastructure.    

Types of Forms for Tax Filing:

As the income streams grow, the need for tax filing forms also increases. Let’s examine two case scenarios to understand the need for different tax forms:

Scenario A: Tax Filing as a Salaried Employee

John is a salaried employee who is paid on a monthly basis. He fills out a W-4 form to explain how much tax his employer should withhold. The rest of the process is as easy as walking in the park. The employer will withhold the taxes on his behalf and file W-2s for him.

Scenario B: Tax Filing as a Freelancer

Max, being a freelancer, receives 1099-NEC forms from different payers (who get services from Max). These forms are collected and then reported on Schedule C.  However, schedule C offers you more flexibility than W-4. 

Hang on! This is just the starter, W-4, W-2, 1099-NEC, and Schedule C. The schedules and forms are more than filing for salaried employees and freelancers. There are series forms like 1040, Schedule A, and more. So, let’s discuss them in detail for further understanding:

Key Tax Forms for Individuals

According to statistics, the United States reported 153.6 million tax returns in 2021. It’s a massive number, and every individual somehow requires a tax filing form for their income report. Below is the list of forms individuals can use for their taxes:

1040 Series: 

First on the list are 1040 forms. These forms are officially introduced by the IRS in the United States for personal tax filing of USA residents. This form is used to calculate the total income of an individual and taxes on that income. 

There are some variations of these forms that are used for different purposes. Below are the details:

  • Form 1040: The main form for individual tax returns. It contains boxes for all income streams, personal information, and other taxes. 
  • Form 1040-SR: The 1040-SR Form is designed for senior citizens who get puzzled by complex design. It’s a simpler version with larger print to easily understand and submitted by older adults.
  • Form 1040-NR: For non-resident aliens who are required to file a U.S. tax return. These forms are typically filled out by trade agents who are not residents of the US but trade there. Additionally, individuals who receive wages and salaries from the US are required to file 1040-NR. 
  • Form 1040-X: Used to amend a previously filed 1040. For instance, if an individual files a 1040 with incorrect information, they can file a 1040-X with corrected information. These mistakes can be math errors, missing income streams, incorrect deductions, or incorrect filing status. In short, whatever the issue is, the 1040-X form can be submitted to fix any error. 

Basically, all of these forms are minor variations of these forms but serve the same purpose. However, there is a difference between Form 1040-NR and Form 1040-X. So, you need to define which form is suitable for you and then file them. 

Schedule A (Itemized Deduction):

Being an individual, one must choose between standard deduction and itemized deduction. According to 2024 tax policies, the standard deduction is $14,600 for 2024. If you have expenses like medical, charities, interests, and theft losses that exceed the standard limit of deduction, then go with itemized deductions. Thus, for that purpose, you will require a Schedule A with Form 1040. 

Here, we have mentioned scenarios where an itemized deduction can be useful:

  • Medical: Expenses that exceed the maximum threshold of 7.5% of your AGI (adjusted gross income).  This can cost doctors, medications, dentists, prescriptions, and medical equipment.
  • State Taxes: If your state applies income taxes, the federal government will allow you a part of the deduction. Additionally, you can expect deductions on real estate taxes and personal property taxes.
  • Interest Paid: Active interest, such as a mortgage on your primary residence or second home, can be deductible. 
  • Charities: If you have charited something to qualified charitable organizations, you can expect a deduction here as well. It typically counts on donations of property, clothing, cash, and vehicles.
  • Casualty and Theft Losses: The federal government allows you to relieve casualty and theft losses. However, losses must exceed 10% of your AGI and also exceed $100 per casualty or theft loss.

Tax Forms to Cater Business Needs:

Businesses have various taxation needs. In fact, there are different types of businesses, and each stands alone from others. Majorly counting business structures, these are: 

  • Sole proprietorship 
  • Partnership businesses
  • Corporate businesses

All these businesses have their own tax duties and forms, which also vary from business to business. Let’s explore them one by one for further understanding: 

Sole Proprietorship Business Income:

Form 1040 is mainly used for sole proprietorship businesses as it falls under individual incomes. However, there are two different schedules for these businesses:

  • Schedule C (Form 1040): Used to report profit or loss from a business or self-employment. Schedule C is all about profit or loss, whether it’s for individuals or for employers. 
  • Schedule SE (Form 1040): Schedule SE is all about self-employment taxes. It is used to calculate income earned by freelancers and contractors and file taxes accordingly. 

For Partnerships:

For businesses that operate on a partnership structure, use Form 1065 (Partnership Tax Form) and Schedule K-1. Just these two forms are enough to understand if you are working with 2 or 3 partners. Below are the details:

  • Form 1065: Used to report partnership income, deductions, and credits.
  • Schedule K-1: Used to report each partner’s share of the partnership’s income, deductions, and credits.

Tax Filing Form for Corporations:

Basically, there are two types of corporations: S Crop and C Crop. Thus, only two forms are sufficient to report the profit and loss of these corporations. 

  • Form 1120 is typically used for C corporations to report their income, deductions, and credits. 
  • A minor variation of Form 1120-S is used to report tax obligations of S corporations. 

For Employers:

Employers are very different entities from other businesses. They have employees, contractors, and freelancers. So, typically, they need to file more forms as compared to other businesses.  Here are some of them. 

  • Form 941: Used to report federal income tax, Social Security tax, and Medicare tax withheld from employees’ wages.
  • Form 940: Used to report federal unemployment tax (FUTA).
  • Form W-2: Used to report wages paid to employees and the amount of taxes withheld.
  • Form W-3: Used to summarize W-2 information.
  • Form 1099-NEC: Used to report non-employee compensation paid to independent contractors.

But remember, these aren’t all. As per your business model, you might need more forms as well. It is better to consult with a tax professional for additional information.

Additional Forms:

  • Form 4562: Used to claim deductions on depreciation and amortization. If your property has lost its value to a certain limit, you become eligible to claim a deduction on it. For instance
  • Form 4684: Used to report casualty and theft losses. Businesses that face a significant disaster or theft can claim deductions on Form 4684.
  • Form 8829: This form is used to figure out the allowable expense of business use of your home. It can be a portion of your home rent, electricity bill, and more. Generally, it is filed on Schedule C.  
  • Form 990: For tax-exempt organizations, this form provides information about the organization’s activities, governance, and detailed financial information.

Final Verdict:

The list of forms is endless. However, you don’t need to know about all forms. Just choose what your business needs and do research on it. You may only need the knowledge of a few. Especially if you own a sole proprietorship business, the filing requirements are limited to just a few forms. 

Additionally, if you need e-filing services for your taxes, go with our comprehensive E-File Work Force Payroll System. The user interface is easy to understand, and filing with this software is a mere matter of seconds. So check your filing requirements and what forms you need, and then file them with our e-filing software, and everything is done. Cheers!

FAQs:

What is Form 4562 for?

Form 4562 is typically used to report depreciation. If your assets, such as buildings, property, or vehicles, lost their value over time, you can claim it on this form. Basically, it provides the option to expense certain costs upfront under Section 179. If your business faces any wear and tear of its assets that leads to value loss, it can be mentioned in 4562 forms to claim deductions. Ultimately, it is a simple way to reduce your taxable income.

How do I report depreciation expenses?

Use Form 4562 to report depreciation expenses. First of all, start with the initial cost of your asset, taxes on it, and installation cost. Then, a depreciation method was used to calculate how much value was lost over time. After that, complete the deduction form. 

Can I do my own taxes?

For sure, you can do your own taxes. However, it is not recommended that you handle taxes on your own. Especially if you have multiple income streams, then filing your taxes without professional aid isn’t recommended. However, if you only have a few W-2s and 1099 forms, self-tax preparation can be considered. Still, you need to be mindful while dealing with tax forms, as mistakes can lead to penalties. 

Can I print my tax forms?

Yes, tax forms can be printed and submitted to the IRS by mail. However, the IRS has strict guidelines about printing tax forms. These include printing in scanable format. Additionally, some tax documents are required to be printed with a specific hue. For example, copy A of 1099 is printed in red. However, the IRS appreciates filing online. It is preferable to file online for your convenience as well as that of tax authorities. 

What is the easiest tax form to file?

The easiest way to file tax forms is via dedicated tax software. Use software that directly submits your tax forms to the IRS. Try E-File Work Force Payroll software for easy tax filing. 

What are the most common forms for tax filing?

Basically, the W-2, W-4, and 1099 series are the most commonly used forms in the corporate sector. Additionally, Schedule C and Schedule A are also commonly filed tax forms.

What is the least expensive way to file taxes?

Filing on your own is considered the least expensive way to file taxes. However, the reality is far away from it if you don’t have tax understanding. Individuals and businesses spend a lot of time filing their taxes on their own, which leads to time loss and potential financial loss. In a wise manner, choose a payroll system that leads to efficient workflow and stress-free tax filing.

Does the IRS do taxes for seniors?

The IRS does not provide tax services for seniors or any other individual. However, it provides free resources for tax filers who qualify for it. The IRS has tied up with tax filing software to offer free tax filing options. 

At what age is Social Security no longer taxed?

Social Security benefits are not tax-free at a specific age. However, your benefits are taxed depending on your total income. For instance, if your combined income (adjusted gross income + nontaxable interest + half of your Social Security benefits) exceeds certain thresholds, a portion of your benefits may be taxable:

Single filers:

  • Up to $25,000: No tax on benefits
  • Between $25,000 and $34,000: Up to 50% may be taxed.
  • Over $34,000: Up to 85% may be taxed

Married couples filing jointly:

  • Up to $32,000: No tax on benefits
  • Between $32,000 and $44,000: Up to 50% may be taxed
  • Over $44,000: Up to 85% may be taxed

Therefore, it’s important to consider your total income rather than just your age when determining if your Social Security benefits will be taxed.

Delphia J. Devlin is a professional content writer with expertise in eFile and tax accounting software. With several years of experience working at E-file Workforce Payroll, she specializes in creating insightful and practical content for the payroll and accounting industry.

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