Information about your income you need to file taxes
No matter if you work for a large company, are self-employed, or run your own business, you have to have the right forms
for your taxes. These can include a W-2 or self-employment paperwork to prove your income.
Here’s a quick guide to which IRS forms and/or personal documentation you’ll need for the most common income situations:
If you have one or more employers
If you work for someone else—meaning, employment, and income taxes are deducted from your paychecks—you will need at least these two forms:
- W-2: Your employer(s) will mail these forms to your house no later than January 31st.
- 1040*: Depending on the complexity of your taxes, there are three 1040 forms to choose from 1040-EZ, 1040A, or the original 1040. (The different types of 1040 forms are explained below).
If you worked for yourself at all (full-time or on the side), you will need a few more forms to fill out:
- 1099: You should receive one 1099 from every company or person you earned income from during the year if it’s greater than $600. (Even if it’s not greater than $600, you still have to report the income.) Generally, this will be a 1099-MISC. These will be included as income earned on your Schedule C form.
- Schedule C*: This is the form where you’ll determine whether you and/or your business earned a profit or suffered a loss during the year. No matter if you earned a profit or suffered a loss, this will be added or subtracted from your overall income on your 1040 form. If you earned a profit, you’ll need to pay employment taxes (like FICA, Medicare, Social Security, etc.) because an employer was not deducting those taxes from your paychecks…you were your own employer.
- Schedule SE*: If you earned a profit, this form will determine the amount of self-employment taxes you’ll need to pay. In general, you can deduct half of this amount from your total income (line 27 on your 1040 form).
- 1040 Form*
- 1099G: Unemployment compensation is included in your taxable income, so you must include it in your tax return. You’ll generally receive a 1099G form from the state that paid you unemployment compensation.
- 1040 Form*
- 1098: Your student loan or mortgage lender(s) will mail you 1098 forms showing how much interest you paid on your loans in the tax year. This interest could potentially be tax deductible.
- 1099-INT: Your bank or investment company will send you these forms for any interest paid to you in cash. Interest income must be reported on your return.
Other income considerations
Besides earned income from a job, you also need to make sure you have paperwork showing distributions from things like:
- IRAs
- Dividends from stocks
- Social Security
- Interest on accounts
- Rental property income
- Unemployment
Each type of income you have to report will require a different form, too.
Adjustments to your income
It’s also important to have any documents on hand that can reduce how much of your income is taxed. This can either lower the amount you owe (when you need to pay taxes) or increase your tax refund. This is why you need to pay attention and gather these documents.
If you’re a student you can use forms 1098-T and 1098-E to show how much you paid for tuition and how much of your student loan interest you paid, respectively. Teachers can provide canceled checks or copies of receipts that show they paid for classroom supplies, which can help to offset their income.
Other examples of items under this category that can help adjust your income include:
- Records of any contributions you made to your IRA
- Proof of improving your home with energy-efficient appliances or windows
- Records of contributing to a Medical Savings Account
Also keep track of expenses such as:
- Moving expenses you incurred
- Any alimony you paid to a spouse
- Information on self-employed health insurance
- Self-employed pension plans
These can be used to adjust your income and help you get a more substantial return.
Explanation of the different 1040 forms
Here’s how to decide which form to use:
1040EZ form
If you’re just starting out, try to use this form if you can. It makes filing your taxes very simple. Here are some of the requirements:
- Taxable income less than $100,000
- No dependents
- Less than 65 years of age
- Single or Married Filing Jointly status
- Interest income less than $1,500
1040A form
This becomes a popular form for many recent college graduates because this form allows you to deduct student loan interest. If your taxes are still fairly simple but you need to deduct student loan interest (or education expenses, IRA contributions, or higher education expenses), you might be able to use this form.
Additionally, if you own a home, you probably will not be able to use this form since you cannot itemize (e.g. deduct mortgage interest expenses) when using this form.
- Taxable income less than $100,000
- You take the standard deduction (do not itemize)
- Only certain tax credits are allowed
1040 form
If all else fails, you’ll need to file a 1040 Form. The older you get, the more likely you are to file a 1040 Form instead of the A or EZ versions.
From this quick checklist, you think you may qualify for the A or EZ you can check out every detail of qualifying on the IRS website. Even if you qualify for the A or EZ versions of the form, you can still use the regular 1040 if that’s what you feel comfortable with.
Deductions and credits
It’s a great idea to itemize deductions if you want to lower how much taxable income you have. This does take more time and effort than just using standard deductions, but if you’re prepared for the extra work, you can enjoy the benefits.
Here are some quick examples of common deductions and credits that you’ll need documentation for:
- Child care credits. If you have children and have to pay for them to receive care while you’re working, you can take this expense off of your taxes. But you need to have information about the provider. Have the provider name, their address, their tax ID, and the amount you paid for the year.
- Education expenses. Any education expenses and adoption costs can also be listed here if you have the right forms to document the expenditures.
- Adoption. If you want to itemize your adoption costs, then you need to have the social security number of your child and records of all medical, legal, and transportation costs.
- Mortgage costs. You can list mortgage interest, points you paid for your mortgage, and private mortgage insurance (PMI).
- Rental property. If you have rental property or work from home, then you will want to consider itemizing income/expenses from your rental property and any information regarding home business expenses.
Taxes you’ve paid
It’s also essential to keep track of all taxes you have paid during the year, as you will need to list them on your taxes in April. Unlike some of the other categories of information you need to gather for your taxes, this list is relatively short and should be easy for you to keep track of.
Keep information on your real estate taxes, personal property taxes, the state and local income taxes you’ve paid. You’ll even want to keep the vehicle license fees you have to pay. These will depend on the value of your vehicle so that they will go down each year, but still essential to have this information come tax time.
Health insurance
While you don’t need to prove you have health care coverage, having this information on hand is helpful so you can easily verify coverage if necessary. This can include your insurance cards, statements from your insurer, explanation of benefits, and even a W-2 that shows your deductions for health insurance.
If you get Form 1095-A, then you need to wait to file your taxes until you have it in hand. This form is the Health Insurance Marketplace Statement. Remember that most employers need not provide you with information to prove that you have health care coverage, so you need to show this information on your own if it becomes necessary.
Life changes
It’s crucial that you know all significant life changes that can affect your taxes. Especially if you’ve done your taxes for years, or if you’ve had the same person complete them for you. Making sure that you list all significant life changes you have been through will ensure that your taxes are completed correctly.
Home sale
If you sell a home, you need to report this on your taxes. Single taxpayers can exclude a profit of up to $250,000, and married taxpayers who file joint returns can exclude a profit of up to $500,000. You can use this exclusion more than once in your lifetime as long as you haven’t taken the exclusion within the past two years for another house.
For most people, the sale of a home won’t impact their taxes. But if you are someone who’s affected, you need to report this.
Catastrophic loss
If you’ve unfortunately suffered a catastrophic loss, you need to claim this on your taxes. The IRS will help you by allowing you to itemize casualty losses, which are commonly related to natural disasters.
Marriage or divorce
If you got married or divorced, you need to have this information ready to report to the IRS. While not always required, I’d recommend having at least your marriage certificate handy.
Additional information you need to file taxes
There are a few other key pieces of information you may need when filing your taxes. So I recommend making sure you have this information on hand. They aren’t necessary for everyone but are part of this tax document checklist to ensure everyone gets the help they need.
Self-employed
The first piece of additional information you may need to have is if you are self-employed. You’ll need to have information regarding your estimated tax payments you made throughout the year. This is important to have so you can prove not only that you paid your quarterly taxes, but how much you paid.
Prior year refunds
If you had a refund in the prior year and wanted it applied to your year, then you need that information. Have all the information regarding how much was paid along with your extension to file.
Foreign bank accounts
People with foreign bank accounts need to disclose this information on their taxes. The information includes the name and location of the bank where your accounts are held, the account number, and even the peak value of your account throughout the year.
Not everyone has to report their foreign bank account information, but if your account exceeds certain thresholds, then you need to make sure that you report this information on your taxes. Because there are, according to the IRS, several exceptions and procedures you have to follow, you may be better off getting professional help if you find yourself in this situation.
Make retroactive savings contributions
Finally, one last thing I recommend you do before you finalize and file your taxes is to get all your paperwork together and make any retroactive contributions you can for the last tax year. This is a great way to take advantage of your college savings or retirement account, and smart to make sure you have all your tax information prepared beforehand.
If you didn’t max out either your retirement account or your college savings account, then now is the time to max them out, even though it is technically a new year. You can easily retroactively contribute to several accounts, including your HSA, IRA, 401K, Roth IRA, Coverdell Education Savings Account, and 529 if you claim the contribution for the prior tax year.
You also need to make sure that your payment is received before tax day or you won’t be able to apply it to the preceding year’s taxes and must claim it on this year’s.