Forms like W2 and 1040 help summarize your income and tax payments, while W4 and I9 deal with your current job's tax withholdings and your eligibility to work. Understanding these is crucial, it ensures you pay the right amount of tax and avoid any potential issues with the IRS.
You've just learned about different types of taxes, like sales tax, property tax, and income tax. One thing we all have in common is the responsibility to pay taxes on any income we receive, whether it's from a job or even interest from a savings account.
In this article, we'll walk you through the key tax forms you'll come across throughout the year. Unfortunately, there isn't a direct logical explanation behind the naming of these tax forms, as IRS simply used whatever letters and numbers were available at the time the forms were created. But, we can help create some fun associations to help remember them. A journey through the world of taxes typically begins with your first job, so let's start there.
Congratulations on your new job! Introducing the W4 and I9 forms
With your new job comes some paperwork, including two very important forms: the W4 and the I9.
The W4 form helps your employer figure out how much income tax to take out of your paycheck. You'll answer a few personal questions like your marital status and if you have any kids.
No worries, though, you can update your W4 form anytime something in your life changes during the year and your employer will adjust how much taxes they are withholding.
Now, the I9 form is all about making sure you're legally able to work in the United States. To fill it out, you'll need a proper ID like a driver's license or passport.
Not a job, but a side gig? Meet the W9
If you are working a side gig or working as a freelancer—or if you're starting a new job as an independent contractor—you might need to complete a W9 form. This form gives your taxpayer identification number (or Social Security number) to the person paying you, so they can report your income to the IRS.
January: Say Hello to the W2 and 1099 forms
In January, your employer will send you a very helpful form called the W2. It tells you all about the money you made and the taxes pulled from your paycheck during the previous year. Make sure to keep it safe, as you'll definitely need it when you file your taxes!
If you received any money from any other source, you will receive a 1099 form. This can be from your side job, contract work, or even from your bank for any interest you earned in your account.
January and February: Paying for college or a house? Here come 1098 forms
If you have any educational expenses or you're a homeowner, there's a useful form called the 1098. This form has the details on mortgage interest or college expenses and will arrive during January and February. 1098 form is very helpful because it can help lower your taxes.
April and the 1040 form: The finale of tax season
As they say, all things must come to an end, especially when it comes to taxes. The grand finale for wrapping up taxes is usually on April
. This is the day you'll need to complete the 1040 form, letting the government know about your income and nailing down your final taxes for the year. Keep in mind, the 1040 form uses all the info you've collected from your W2s, 1099s, and other forms. Once you complete this form, you will know if you owe taxes, or if you are getting a refund.
Lots of people get their taxes out of the way even before the April deadline, but it's definitely the last call to get them done.
Check your understanding
You just received a 1099 form from your bank.
What is the most likely reason for receiving this form?
Want to join the conversation?
- Does a 1099 form cover gifts, birthday/anniversary presents, or gift cards (or an equivalent to a gift card)?(2 votes)
- No. Unless you are a former president of the United States, who received 5 million dollars from his father to get him started, birthday and anniversary presents rarely reach the amount that would affect your taxes.(4 votes)
- I've heard that if you mess up on your taxes you could go to jail. Is it easy to mess up on Taxes? and if you do mess up, DO you get sent to jail?(1 vote)
- Hm, perhaps you're thinking about tax evasion. The goal of discipline is to help people learn and grow from their mistakes, not punish them for it.
If someone purposely decides to evade taxes, they can be charged and sent to jail. If they don't know how to fill out their tax forms, they can be directed to various resources to help them.(3 votes)
- "needss" is in the first question: "(B) Your bank needss your new address."(2 votes)
- Report this error to https://support.khanacademy.org/hc/en-us/requests/new and perhaps something can be done.(1 vote)
- Um, is it just me that noticed the first sentence of the W4 explanation repeat its self or am I just tripping?(2 votes)