What Do I Need To File My Taxes?

I am not a CPA or tax professional.  This article is for informational purposes only and should not be used as professional tax advice.  The links included in this article are to the IRS.gov instructions for each form and provide additional details and guidelines.

It’s That Time Again

Tax season is upon us, yet again.

Here is a quick and dirty guide to the basic tax forms that are most common.  Ensuring you have all your necessary tax documents ahead of time makes the meeting with your CPA or your filing method of choice much smoother.

If you know what you should and should not have, you’ll know what to look for, what you’re missing, and what you don’t have to worry about.  Preparing ahead of time reduces the chance of a mistake, ensuring your return is accurate and you’re not overpaying! 

Let’s try to make your tax prep a little bit easier this year.  Here we go. 

IRS Free File

First, if you’re filing online, check out IRS’s Free File before you start your e-file.  If your income is $69,000 or less you can file your taxes with the Free File software at no cost.

There are several companies and commercials touting free filing, but sometimes when you get to the end magically you somehow have to pay to file your return.

Going through the IRS Free File website will ensure that it truly is free if you make less than $69,000.

If you make over $69,000, the free file website still has free fillable forms, tools, and guidance to help with your return and lower your filing cost.

Common Tax Forms

W2

The W2 is the tax form you get from your employer that reports wages paid to and taxes withheld from an employee.  A W2 is typical if you’re a “normal 9-5” employee and your taxes automatically come out of your paycheck.

1099 FORMs

1099-MISC

You get a 1099-MISC when you receive $600 or more in income, rents, other payments like prizes, awards, etc. from anyone who is not your employer.

If you’re not a W2 employee and therefore don’t get a W2 and are an independent contractor (or “a 1099”), you’ll get a 1099-MISC.

There are countless 1099 jobs, but some common ones can be Real Estate Agents, Fitness Instructors, Uber drivers, freelancers of any kind.  It all depends on the structure of the company you work for and how you work for them, or your employment relationship.  If you’re doing work for them, but are not a W2 employee, you’re probably a 1099.

1099-NEC

The 1099-NEC form will come into play for your 2020 taxes, so you won’t use it until early 2021 when you’re filing your 2020 taxes.  NEC is nonemployee compensation and next year will be the form you get if you’re a freelancer or an independent contractor.  In the past, and right now while filing 2019 taxes, that income is reported via the 1099-MISC.

1099-INT

The INT in 1099-INT is for interest.  If you received $10 or more in interest payments, you’ll receive a 1099-INT from the bank or other entity that made interest payments to you.

Think checking and savings accounts.  If you have a decent amount of money sitting in an account that makes some interest and your total interest payments for the calendar year are greater than or equal $10, you’ll get a 1099-INT.

If you have money in an account but it’s not that much or the interest rate is microscopic and therefore you made less than $10 in interest, you won’t receive a 1099-INT and you don’t have to worry about it.

If your savings account isn’t a high-yield savings account making something in interest, look into a high-yield savings account.  It’s not going to make you rich, but it’s free money people!

1099-DIV

Similar to the 1099-INT, you’ll receive a 1099-DIV if you are paid $10 or more in dividends or stock distributions.  If you receive dividends in a tax-exempt investment account like an IRA, you will not need nor receive a 1099-DIV.

1099-R

In keeping with the theme, the 1099-R comes when you receive $10 or more in distributions from a pension, retirement plan, IRA, annuity, etc.  If you’re receiving income from a retirement account or retirement plan, you’ll get the 1099-R.

1099-G

The 1099-G comes into play for money you received from the federal, state or local government.  Common occurrences of this include unemployment compensation and state or local income tax refunds, credits, or offsets.

1098 FORMS

1098

The 1098, the Mortgage Interest Statement, comes from your mortgage company when you have a mortgage on real property, ie: your house, and you paid $600 or more in interest in the calendar year.

If you own multiple properties and have multiple mortgages, you’ll receive a 1098 for each mortgage.  The $600 minimum is per mortgage, not an aggregate of all mortgages you may have.  The Mortgage Interest Statement outlines how much interest you paid on each mortgage and is used to calculate the mortgage interest deduction.  This applies only to individuals and sole proprietors.

1098-E

The 1098-E is similar to the 1098 Mortgage Interest Statement, but instead of for mortgage interest, the 1098-E is for student loan payments and interest.  The 1098-E comes from your student loan servicer and details the amount of interest paid on your loan.

Similar to the 1098, you only get a 1098-E if you paid $600 or more in interest, and you’ll get a separate 1098-E for each loan you may have when you paid $600 or more in interest on that specific loan in the calendar year.  The 1098-E is used to calculate the student loan interest deduction.

1098-T

You will get a 1098-T from your college or university for any qualified tuition and related expenses, ie: tuition, fees, course materials required for enrollment.  Unlike the other 1098 forms, there is no minimum threshold for the issuance of the 1098-T.  The 1098-T is used to calculate education tax credits when filing your taxes.

Famous Last Words

There are a bazillion other forms that could come into play while filing your tax return, these are just the most common.  The IRS website outlines everything, but that doesn’t mean it’s simple and easy to understand.  

If you’re unsure about deductions you may qualify for or events you need to claim, be sure to consult a tax professional.  Happy filing!

Ready to get your financial shit together?  Check out my free resources or schedule a free insight call and see what your future has in store for you.

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Written by Kayla

04/06/2020

Change Your Money Life Forever

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