First Step: Learning to File
Tax season is here and if you haven’t filed your taxes yet it’s time to get your paperwork in order. But are you unsure of what paperwork is needed to file taxes? Do you even know what a 1099 form is? Not to worry, here’s a quick and basic rundown of the forms military servicemembers will need to file 2007 taxes.
The W-2 Form, the staple of taxpayers everywhere
Most employed Americans know what a W-2 form is or filled it out. Employers use this form to report the amount of salary they paid to employees during the past calendar year.
A W-2 also has other very valuable information including:
- -The amount of federal tax withheld from your pay.
- -The amount and the name of the state taxes withheld from your pay.
- -The amount deducted for Social Security and Medicare taxes.
This form also has several blocks that feature a series of letters and numbers. These codes are necessary if taxpayers plan to file your tax return electronically.
Form 1099 is used to report income received from a source other than an employer. If you earn interest from a savings account or dividends from stock shares, this income will be reported to you and the IRS. If you received a refund of state income taxes in 2007, the state that issued you the refund will report the amount of the refund on Form 1099. Additionally, if you work as an independent contractor — such as a computer programmer that works freelance — any company that paid you more than $600 is required to report the contractor’s total fee on Form 1099. Finally, if you receive these forms, compare them carefully to the last paycheck or earnings statement for 2007. If there are any differences, discuss them as soon as possible with the company that issued the W-2 or 1099. If the employer made a mistake, insist that they file a corrected copy with the IRS immediately.
This form is great form for individual taxpayers. Form 1040A is also one the simplest forms taxpayers can use if they choose to file on paper. Only taxpayers who have a taxable income of $100,000 or more can use this form. This form is applicable to taxpayers who meet the following qualifications:
- -Have capital gain distributions
- -Able to claim certain tax credits
- -Able to claim deductions for IRA contributions, student loan interest, educator expenses or higher Education tuition or fees
Taxpayers shouldn’t worry about obtaining this form on their own. If you filed a 1040A for 2007; in all likelihood, you will receive Form 1040A in the mail this year.
Report life changes
What’s more, it’s vital to report major changes (marriage, divorce, death of a spouse or other dependent, birth of a child) or major changes in income called to active duty, deployed overseas, big promotion, new job) to the IRS. Reporting these changes will help you decide which forms you should use based on income and expenses for 2007. If different forms are needed, they are easily accessible at the IRS Website. It’s important to ask for forms at the beginning of tax season. As we get closer to April 17th, requests for forms really builds up, and the IRS may not be able to mail the forms in time to file by the deadline.
The tax season is stressful and confusing. But if the necessary forms are acquired early and filled out properly, the looming deadline won’t feel like a weight on servicemembers shoulders.