In the U.S., understanding tax forms W2, 1098, and 1099 is essential. The W2 reports an employee's income and withheld taxes. The 1098 details tax-deductible expenses like mortgage interest. The 1099 reports miscellaneous income such as rent or royalties. Proper comprehension and use of these forms help individuals fulfill their tax responsibilities accurately. Created by Sal Khan.
- [Instructor] In this video, we're gonna go into some forms that are very useful when you are filling out your income taxes. If you work for someone as an employee, first and foremost, you're going to get a W-2 form. And I always find the W-2 form interesting. You typically get it at the beginning of a calendar year so that you have it in time to file for your taxes. But it's a nice summary of what you were paid, and what was withheld, either at a federal level, for federal income tax, for social security, but you also see things, like state taxes withheld on top of that. And so this is just a nice summary, and for a lot of folks, this is all the information that you're going to need, if you don't have really complicated things in your life, if you don't have a mortgage, if you're not a landlord. if you're not an independent contractor, you're gonna be able to fill out most of your taxes usually using just this form right over here. Now, a lot of folks have income above and beyond the wages, tips and other compensation that you get from your W-2 or that you get from your employer, and that will show up in some form of a 1099. So this is an example of a 1099 for miscellaneous information, M-I-S-C, MISC, 1099 MISC, right over here. But there are 1099s for, say, interest you get on your bank account, there are 1099s for dividends. A 1099 can be useful, let's say if you're an independent contractor, So you're getting income, it's not coming from an employer, it's coming from some type of a company that hired you to do something, but they're not giving you benefits, et cetera. So a lot of folks might have a 1099 of some form for that other income, that income that you're not getting from your employer, and you'll get one 1099. Let's say you have two bank accounts, they're each giving you interest, you'll get one 1099 from each of those. Once again, very useful when you're filling out your taxes. Now, the last form I'm going to show you is most relevant, well, especially this version right over here, a 1098 is actually to document interest that you have paid to other parties, or other types of money outflows, I should say, that might be tax deductible. So this one right over here, this 1098, is a mortgage interest statement, in many cases, the interest that you pay on the mortgage on your actual house, so not a rental property, not a second house, but on your actual house, that is oftentimes interest deductible. And there might be even cases where some of those other examples where the mortgage interest is actually deductible as well. But this one, when you get this statement from whoever you're paying your mortgage payments to, whoever you're borrowing from, this will also be useful when you are filling out your taxes to even see if you qualify for that mortgage interest deduction. So I'll stop there. There's many other tax forms, but these are the ones that most people are going to encounter.