The tax filing deadline has been extended to July 15, 2020 this year due to the novel Coronavirus pandemic. Although you have more time to file, you may not want to delay if you're getting a tax refund.
You do need to make sure you've got all the required forms before you get started with your filing, though. These forms provide essential information you need to calculate what you owe or what your refund is. But what forms specifically should you be looking out for? Here are four of them.
Your W-2, or "Wage and Tax Statement", is sent by any employers you worked for over the course of the year. Employers must send it if you earned over $600, but many send one even if you earn less.
This form details the total wages you were paid as well as the taxes already withheld from your paychecks. You'll need it to correctly report your income to the IRS.
If you earned income outside of a traditional employment relationship, you'll receive 1099s in the mail. There are actually a few different kinds of 1099s, including:
- 1099-MISC: This is the form you'll get if you earned money as an independent contractor, if you earned rental income, or if you made money from direct sales outside of a traditional retail establishment.
- 1099-INT: If you received interest income, it should be reported on this form.
- 1099-DIV: If you invested in dividend-producing stocks and earned money from dividends, you should receive this form detailing your earnings
1099s are important, as you're required to report all income you earn.
1098 forms help you save money on taxes by claiming credits or tax deductions. There are also different kinds of 1098 forms, including:
- 1098-E: This form details your student loan interest so you can claim the student loan interest deduction. You can claim this deduction even if you don't itemize on your taxes, as long as your income isn't too high.
- 1098: If you itemize on your tax return, you can claim a tax deduction for mortgage interest paid on loans up to $750,000 or up to $1 million (depending when you purchased your home). This form details the interest you paid so you can claim your savings.
- 1098-T: This form details tuition and qualifying educational expenses that might entitle you to claim the American Opportunity Tax Credit or Lifetime Learning Tax Credit.
Deductions reduce taxable income while credits cut your tax bill on a dollar-for-dollar basis, so a $2,000 tax credit would reduce a $6,000 tax liability down to $4,000.
If you purchased health insurance on a state or federal Obamacare exchange, this form will be used to determine if you received the correct amount of Advanced Premium Tax Credits.
These tax credits, more commonly known as insurance subsidies, can be paid to your insurer throughout the year to help you afford coverage. However, the amount you're entitled to is based on your income. If you make more than you estimated when buying insurance, you may have received too much in subsidies and have to repay a portion. If you make less, you may be eligible for additional credits at the end of the year.
This form details who was covered in your family and how much your subsidies were worth.
Don't start your taxes without the essential forms
If you're missing these forms, you're likely to find yourself frustrated when you try to do your taxes. If necessary, contact your employer, the company you work for, your lender, or customer support for your healthcare marketplace to find the forms you're missing.
When you receive them, keep them together to give to your accountant or refer to as you finish up your tax return. Having all your documents ready should make tax filing a much easier process.