IRS Tax Returns
What Is An IRS Tax Return?
The tax form or forms used to file income taxes with the Internal Revenue Service (IRS). Tax returns often are set up in a worksheet format, where the income figures used to calculate the tax liability are written into the documents themselves. Tax returns must be filed every year for an individual or business that received income during the year, whether through regular income (wages), interest, dividends, capital gains, or other profits.
Why Should I Hire Your Firm To File My Tax Return?
There is a difference between an accountant and just a tax preparer. As tax season kicks into gear you’ll begin to see advertisements pop up with tax preparers in your area who will do your taxes for you at a cost. Keep in mind that when dealing with one of these places you probably aren’t going to get a full-blown accountant or CPA. Instead, you’ll likely have someone who is qualified to handle returns, but they will likely do little more than ask you the same questions that software you buy on your own does and then plug in the numbers. While it’s nice to get some one-on-one time with someone, you also want to keep in mind that this person is more or less just trying to get your taxes done, not assess your financial situation and help you put together tax strategies going forward.
How Long Should I Keep My IRS Tax Return And Documents?
According to the IRS website The length of time you should keep a document depends on the action, expense, or event the document records. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.
The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or that the IRS can assess additional tax. The below information contains the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.
Note: Keep copies of your filed tax returns. They help in preparing future tax returns and making computations if you file an amended return.
- You owe additional tax and situations (2), (3), and (4), below, do not apply to you; keep records for 3 years.
- You do not report income that you should report, and it is more than 25% of the gross income shown on your return; keep records for 6 years.
- You file a fraudulent return; keep records indefinitely.
- You do not file a return; keep records indefinitely.
- You file a claim for credit or refund* after you file your return; keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.
- You file a claim for a loss from worthless securities or bad debt deduction; keep records for 7 years.
- Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
The following questions should be applied to each record as you decide whether to keep a document or throw it away.
IRS Tax Forms
The Internal Revenue Services (IRS) has many tax forms depending on your business type or employment status.
The Form 1040 is one of the most common forms you will come across when filing your tax returns. The Form 1040, U.S. Individual Income Tax Return is the starting form for personal Federal income tax returns filed with the IRS. The Form 1040 is made up of two full pages (exclusive of attachments). The first page would carry information such as taxpayer details, dependents, adjustments to income and income items. The second page would calculate tax due, allowable deductions and credits and taxes already withheld from wages. The Form 1040 also has 11 attachments called Schedules which must be attached depending on the tax payer.
Under the 1040 series there are many forms such as 1040A, 1040EZ, 1040EZ-T, 1040X etc. Each form is to facilitate specific taxpayer type. For example, a tax payer with a taxable income of less than 100,000 USD would fill a form 1040 A who chooses the standard deduction instead of the itemized deduction. A taxpayer filing as Single and Joint Filers with No Dependents would file a 1040EZ. The Form 1040X is the Amended U.S. Individual Tax Return and should be filed in the case of there being an amendment on the Tax Return already filed.
The 1099 series is to report income which is earned not as a wage, salary or a tip. For example, a Form 1099 should be used in paying an independent contractor. In this case three copies must be made – for the payer, payee and the IRS.
The Form W2 is used to report salaries paid to employees and the taxes withheld from them. The Form W2 is also used to report FICA taxes to the Social Security Administration. The Social Security Administration would in turn report to the Internal Revenue Services of the relevant amounts. The employers must complete a Form W2 on behalf of their employees.
The W4 form is used by employers to determine the correct amount of withholding taxes to be deducted from their employee’s wages. The employee must handover a completed W4 with all his/her tax information at the point of starting work at a new company. If there are changes such as filing status, a new W4 form must be handed over to employer.