Why Is It Important To Understand Tax Forms
Nowadays, most people file their taxes using websites or other products that do the work of figuring out which forms you need to file and filling them out. But its not always cheap. Many of those services and software like TuroTax or H& R Block charge users depending on which forms they need to use.
For 2020 tax filings , anyone who made less than $72,000 a year is able to file for free as part of the IRS Free File program. Companies including Intuit, which makes TurboTax, H& R Block and others spent millions lobbying to bar the IRS from making its own free filing option while promising to create their own free products. But then, as ProPublica reported, they systematically undermined the truly free options by hiding search results and even though for many, theyre anything but.
If you havent filed yet, we recommend checking out our guide to filing your state and federal taxes completely for free, looking to see if you qualify for the Earned Income Tax Credit or learning how to track your refund. Though the IRS offers the option of paper filing, with the current COVID-19 state of affairs and a massive backlog of paper returns and documents the agency is encouraging taxpayers to file electronically to ensure prompt payment of refunds and avoid filing errors. Most paid and free tax prep services will tell you which forms you need to file, but if youre still confused, see below for a list of the most commonly used tax forms.
How Long Does It Take To File Taxes
It takes about 13 hours for the average taxpayer to do their return, according to IRS. That time includes time for recording keeping, tax planning, for submission and other activities and is, of course, dependent on how youre filing and what tax forms you are using. That time may also vary if you own a business or not. Non-business filers may only take up to 8 hours to complete their taxes while business owners spending about 24 hours filing their taxes.
Certain forms also take longer to file. For example, depending on the complexity of your taxes, the total preparation time can vary from and average of five hours for a 1040-EZ to an average of 16 hours for a standard 1040 form.
Coronavirus Unemployment Benefits And Economic Impact Payments
You may have received unemployment benefits or an EIP in 2021 due to the COVID-19 pandemic.
Unemployment compensation is considered taxable income. You must report unemployment benefits on your tax return if you are required to file.
If you received the EIP, you do not need to report it as income whether youre required to file a tax return or not. If you did not receive some or all of your stimulus payments, you may claim missing stimulus money that you are owed by filing for a Recovery Rebate Credit on your 2021 return.
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Filing Requirements Chart For Tax Year 2021
G.S. 105-153.8 requires a married couple to file a joint State income tax return if:
Generally, all other individuals may file separate returns.
On joint returns, both spouses are jointly and severally liable for the tax due. A spouse will be allowed relief from a joint State income tax liability if the spouse qualifies for innocent spouse relief of the joint federal tax liability under Code section 6105.
A married couple who files a joint federal income tax return may file a joint State return even if one spouse is a nonresident and had no North Carolina income. However, the spouse required to file a North Carolina return has the option of filing the State return as married filing separately. Once a married couple files a joint return, they cannot choose to file separate returns for that year after the due date of the return. If an individual chooses to file a separate North Carolina return, the individual must complete either a federal return as married filing separately, reporting only that individual’s income and deductions, or a schedule showing the computation of that individual’s separate income and deductions and attach it to the North Carolina return. In addition, a copy of the complete joint federal return must be included unless the federal return reflects a North Carolina address.
Itemized Tax Deductions And Credits
The government offers a number of deductions and credits to help lower the tax burden on individuals, which means more money in your pocket. You’ll need the following documentation to make sure you get all the deductions and credits you deserve.
- Child care costsprovider’s name, address, tax id, and amount paid
- Education costsforms 1098-T, education expenses
- Adoption costsSSN of child, legal, medical, and transportation costs
- Home mortgage interest and points you paidForms 1098
- Charitable donationscash amounts and value of donated property, miles driven, and out-of-pocket expenses
- Casualty and theft lossesamount of damage, insurance reimbursements
- Other miscellaneous tax deductionsunion dues, unreimbursed employee expenses
Properly documenting the taxes you’ve already paid can keep you from overpaying.
- State and local income taxes paid
- Personal property taxesvehicle license fee based on value
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Standard Deduction Or Itemized Deduction
Generally speaking, most people will take a standard deduction vs an itemized deduction, but if your standard dedication is less than your itemized deduction, you may want to do an itemized deduction. If you do an itemized deduction you will need to keep accurate records of money paid.
Some typical deductions are:
- Charitable gifts
While youre working on preparing your tax documents and gathering paperwork, now is the perfect time to consider using the Rent Plus program offered to Daro Residents. The Rent Plus program reports your rent payments to the credit bureaus which helps build your credit portfolio. If you are already a Daro Apartments resident participating in the Rent Plus program, you may want to check to see if you qualify for a possible renters tax credit for rent paid.
Having a good understanding of the basic paperwork you need in order to file your taxes will help reduce tax time stress. If you are owed a refund, direct deposit will be the fastest way to receive a tax return if youre expecting one, so youll need your bank account number and the banks routing number as well.
Fill Out Income And Personal Identification Information
STEP 2 E-file your tax forms, requests both required and optional information.
- Personal verification: The form asks for your 2019 Adjusted Gross Income. If you did NOT file taxes last year, enter 0 in the box. Ignore part B which asks for last years self-selected signature PIN.
- Electronic signature: Instead of signing your name, your signature is a 5-digit PIN number that you create.
Note: these fields are required for you and your spouse if you are married filing jointly.
- Cell phone number
- Drivers license or state issued ID number, state, issue date, and expiration date leave blank if you dont have one
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Common Income Deduction Statements
Most taxpayers depend on the same basic data to file returns. If you work for someone else, the IRS expects you, and the agency, to get a statement detailing that income. The data are slightly different, depending on whether you get paid a salary or do contract work, but theres a form for either case.
W-2 This is the key form, and you need one from each employer you worked for during the past year. Your W-2 shows how much money you made, how much income tax was withheld, Social Security and Medicare taxes paid, and any benefit contributions retirement plans, medical accounts and child care reimbursement plans.
1098 For most homeowners, mortgage interest is tax-deductible, and this document will tell you how much you paid last year. Your lender is required to send you one of these forms if you paid at least $600 interest. Actually, your mortgage company probably wont send you an official IRS form, but a document of its own design that contains the same data. In addition to the mortgage interest, other information often found on this statement includes amounts paid toward points to get the loan and escrow disbursements for real estate taxes and property insurance .
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Where Can I Get Irs Tax Forms
There are five ways to get IRS forms to do your taxes.
Good tax software packages offer blank IRS forms to look at as you complete the process of preparing your tax return.
The IRS Free File program offers blank fillable IRS forms to everyone, regardless of income.
The IRS website has IRS tax forms you can download as PDFs or print. The IRS also offers Braille-ready formats that work with screen enlargers, screen-reading software or embossed printing.
Check the library or the post office. Many offer free tax forms during filing season. You can also try visiting your local IRS office .
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Are My Social Security Benefits Taxable
As a very general rule of thumb, if your only income is from Social Security benefits, they wont be taxable, and you dont need to file a return. But if you have income from other sources as well, there may be taxes on the total amount.
If youre married and file a joint return, both spouses must combine their incomes and Social Security benefits when figuring taxable amounts. This applies even if the spouse did not have any benefits.
The Days Of Wondering If You Should Use Form 1040 1040a Or 1040ez To File Your Taxes Are Over
For the 2018 tax year and beyond, a single 1040 replaces the three forms with one version that appears much smaller than the old 1040s.
The new Form 1040 does contain fewer boxes to fill in. But thats because many of the lines from the old 1040A and 1040 have been moved off the main form and onto additional schedules. So its possible that taxpayers may find they need to include even more forms with their tax returns from now on.
Since you probably still need to submit additional paperwork to the IRS, the answer to the question What tax forms do I need? still doesnt have an easy answer.
- Taxes youve already paid
- The amount you owe or the refund youre entitled to
- Whether youre claiming the child tax credit
When you look closely at the new 1040, youll notice that the IRS asks you to attach additional forms and schedules. These contain information from the old 1040 and 1040A that the IRS has moved to new forms with new names.
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Deep Dive Into 1099 Nec
Are you self-employed? Do you work as an independent contractor, gig worker, or small business owner? Then you may need to file a Form 1099-NEC.
Depending on what is happened to your financial life over a year, you may receive one or more types of tax forms for your 1099 Form or even more than one 1099s from the same type. Your 1099 form is a kind of income information return if you received any kind of payments or income during the past year other than wages, salaries, or tips, you would get a 1099 form in the mail. Tax Form 1099 is one type of IRS tax form used to report income that is not wage income for federal tax purposes. Just because you get a tax form with 1099 Form does not necessarily mean you owe taxes on this money. You should always report your accurate business income to the IRS if you get your 1099-K form through PriorTax.
Tax Form 1099 is one type of IRS tax form commonly used to report various types of income a taxpayer receives each year from organizations, financial institutions, and other sources unrelated to work. An IRS 1099 form is a set of tax forms documenting various types of payments made by an individual or a business, which is generally not your employer.
Fill Out Filing Status Claim Dependents And Provide Banking Information
For STEP 1. Fill Out Your Tax Forms, there is required and optional information to complete. Skip the optional fields if they do not apply to you.
- First name, middle initial, and last name
- Social Security Number or Individual Identification Number
- Dependents in 2020: First and last name, SSN, relationship to you. Check the box if they qualify for the CTC.
Note: these fields are required for both you and your spouse if you are married filing jointly. If you have a new qualifying child in 2021, you will be able to provide their information in a separate tool this summer.
- Check the box if you or your spouse can be claimed by someone else as a dependent
- Recovery Rebate Credit amount: If you didnt get the full first or second stimulus check, you can enter the amount you are owed
- Bank account routing info: If you leave this blank, your payments will be mailed.
- Identity Protection PIN: only include if the IRS provided you a number because youve experienced identity theft.
After entering all the information that relates to you, click Continue to Step 2.
If you didnt receive your full first or second stimulus check, you can enter your Recovery Rebate Credit amount to get your money. Be sure you know the exact amount you received. If you dont enter the right amount, your CTC and stimulus checks may be delayed.
Heres how you calculate how much you are owed.
First stimulus check: $1,200 OR $2,400 + $500 per dependent
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Individuals Required To File A North Carolina Individual Income Tax Return
The following individuals are required to file a 2021 North Carolina individual income tax return:
- Every resident of North Carolina whose gross income for the taxable year exceeds the amount shown in the Filing Requirements Chart for Tax Year 2021 for the individual’s filing status.
- Every part-year resident who received income while a resident of North Carolina or who received income while a nonresident that was attributable to the ownership of any interest in real or tangible personal property in North Carolina, or derived from a business, trade, profession, or occupation carried on in North Carolina, or derived from gambling activities in North Carolina and whose total gross income for the taxable year exceeds the amount shown in the Filing Requirements Chart for Tax Year 2021.
- Every nonresident who received income for the taxable year from North Carolina sources that was attributable to the ownership of any interest in real or tangible personal property in North Carolina, or derived from a business, trade, profession, or occupation carried on in North Carolina, or derived from gambling activities in North Carolina and whose total gross income from all sources both inside and outside of North Carolina for the taxble year exceeds the amount shown in the Filing Requirements Chart for Tax Year 2021. For nonresident business and employees engaged in disaster relief work at the request of a critical infrastructure company, refer to the Personal Tax Division Bulletins.
When Social Security Benefits May Be Taxable
When determining whether you need to file a return and you receive Social Security benefits, you need to consider tax-exempt income because it can cause your benefits to be taxable even if you donât have any other taxable income.
Hereâs an example of where you may need to file, even with tax-exempt income:
- You are under age 65 and receive $30,000 in Social Security benefits, but also receive another $31,000 in tax-exempt interest. $14,700 of your Social Security benefits will be considered taxable income.
- This is greater than your standard deduction and you would need to file a tax return.
To figure out if your Social Security benefits are taxable:
- Add one-half of the Social Security income to all other income, including tax-exempt interest.
- Then compare that amount to the base amount for your filing status.
- If the total is more than the base amount, some of your benefits may be taxable.
TurboTax can help you estimate if youâll need to file a tax return and what income will be taxable.
TurboTax Tip: If you have had federal taxes withheld from your paycheck, you might want to file a return even when you are not required to, so you can receive your tax refund.
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Complete Guide To 1099 Nec
Therere various types of 1099 tax forms, but one of the most common is the Tax Form 1099-NEC. This form is typically sent to self-employed individuals, such as independent contractors, gig workers, and small business owners. As an independent contractor, gig worker, or small business owner, you may receive a Form 1099-NEC. This form reports income earned from work such as driving for DoorDash, freelancing on Upwork, or renting a room out on Airbnb.
As an independent contractor or small business owner, you may receive a 1099-NEC tax form from your clients or customers. This form reports money paid to you for services rendered. The NEC in the forms name stands for Non-employee Compensation.
Before 2022, payments made to contractors and freelancers were reported on a 1099-MISC form instead. That form still exists but is now used for reporting different types of non-wage income.
This entry was postedon Thursday, October 13th, 2022 at 8:00 amand is filed under Tax Deductions and Credits, Tax for Business, Tax Tips and Tricks, Taxes for Prior Years.You can follow any responses to this entry through the RSS 2.0 feed.You can leave a response, or trackback from your own site.