Do You Really Understand Your Tax Forms?
For many, the action of having your tax refund completed is placed in the hands of a reputable preparer who uses all the information provided to either determine how much you owe, or how much you will be receiving back. And as you turn in those wrinkled receipts you have been hanging onto for months now, along with all the other pertinent information received by your employer, the bank, and from any investments made, Arizona tax attorneys ask you this: Do you truly understand the purpose of each tax form?
One obvious reason is that each form revolves around money. After all, isn’t the entire concept of filing your taxes based on the taxable income you received for the prior year? With anything in life, it is always important to understand the purpose of the things you are required to do, and to have, therefore, Arizona tax lawyers are providing you with some useful information that will hopefully have you walking away with more knowledge regarding taxes than what you began with.
Forbes.com explains some common tax forms you may be familiar with below.
W-2 Form:
Let’s begin with the most common form, the W-2. As you are probably most familiar with this form seeing that you receive it from your employer no later than the end of January, the only purpose of this form is to report income. While you have the duty of reporting your income, so does your employer. And were you aware that any “employer who pays at least $600 in cash or cash equivalent,” is responsible for furnishing a W-2 form. For each employee, an employer prepares “six copies of each” W-2 form.
Form 1099:
These forms are used to report income that “can’t be neatly organized anywhere else.” It is used when payments are made during trade or business. For private services such as having your lawn mowed, a 1099 form would not be used to report that expense. Forbes also noted that with the new Tax Regulations set in place, employers are required to “satisfy certain requirements by ticking a box on the left side of the form 1099.”
Form 1098:
Tax lawyers remind those homeowners out there that you will most likely be needing to file a 1098 Mortgage Interest Statement. This form is used to “report mortgage interest, including points, of $600 or more paid to a lender” for your mortgage.
A home is identified as “a house, condominium, cooperative, mobile home, boat, or similar property.” The total interest deduction that can be claimed for your first and second home cannot exceed $1 million, or $500,000 if married and filing your taxes separately.
With the provided explanations of tax forms, tax fraud attorneys in Arizona encourage you to venture out and read the entire piece from Forbes.com that truly defines each and every aspect of the tax forms you will be filing this tax season.
In the event you require the assistance of an Arizona tax fraud legal representative, USAttorneys can guide you and connect you with a reputable professional who will be more than willing to help.
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