Filling your taxes requires you to gather several documents and make sure the information on them is correct. You need information about your income, your deductions and information that can identify you and your family.
When filing your taxes, you have to prove your identity to the Internal Revenue Service. To show the IRS who you are, you must include your name and your Social Security number on the return. You will also need the names and Social Security numbers of your spouse or children if you have any.
Besides identifying yourself, you also have to gather information about your income. Depending on how complicated your income situation is, this could include one document or several. For instance, if you are an employee, you should receive a W-2 form. This document is created by your employer, and it outlines exactly how much money you have earned for the year. If you are not an employee, you might receive 1099 forms from companies that you work for. You might also receive 1099 forms if you are an investor and you have interest income for the year.
When you file your taxes, the IRS gives you the opportunity to lower your taxable income with income tax deductions. These deductions can be proved in several ways, depending on what they are. For instance, if you own a house, you should receive a statement from your mortgage lender that shows how much interest you paid. You may also receive statements from charities that tell you how much you donated over the course of the year. If you have a small business or are self-employed, you can also deduct legitimate business expenses. To prove these deductions, you need receipts or some other document that shows you purchased them.
While many people are familiar with forms like the W-2 or the 1099-Misc, other tax forms could be received. For example, many people who have debt end up settling that debt with their creditors. When this happens, the creditor agrees to take less money than what is owed on the debt. When the debt is canceled, this creates income for the debtor. If you go through this process, you should receive a 1099-C cancellation of debt statement. You may also receive a 1099-G if you got a tax refund from a state or local government.
List of State Taxes
Each state has its own type of taxes. For instance, most states charge an income tax and sales tax but the rates...