10 Most Common Business Tax Forms

There are a lot of business tax forms which can be equally as important as the other. You should be knowing the difference between them as it can affect you and your business in a lot of significant ways. The IRS has different tax forms for different purposes. It helps to identify which one is best suited for your purpose. Also when you learn about the different types of forms available, you are saving huge amounts of money without having to invest in a business tax consultant.

There are various tax forms provided by the IRS which helps you understand which one you should be using for your business. Using the right kinds of forms can also prevent you from making costly mistakes. There are over 900 tax forms available in the IRS website. However, the good news is you do not need to familiarize yourself with most of them. In this article, we are going to talk about the 10 most important business tax forms out there. Read on to find out more.

TYPES OF TAXES

In order to understand the most common business tax forms out there, you first must know about the different types of business taxes. Individuals in the US only need to concern themselves with state income and federal taxes. However, when you are a business owner, you get 5 different types of taxes which might show up on your financial agenda. These are namely :

* Income Taxes : According to the latest guidelines of the IRS, all types of businesses should be filing an income tax return annually. This does not however apply to partnerships. Partnerships have to file information returns. Also, as a business owner you also have to file individual returns on your income tax using the IRS Form 1040 annually.
* Estimated Taxes : As a rule of thumb, you should be making quarterly payments on tax in order to cover your income tax, on incomes not subjected to self employment and withholding. If the payments you estimated are falling short of the yearly tax liability, you might need to pay a penalty.
* Self employment tax : These kind of taxes are for sole proprietorships, members of a limited liability company, general partners and covers Medicare taxes and Social Security.
* Employment Taxes : If you have employees working for you, you should be reporting and depositing federal income tax withholdings, Medicare and Social Security Taxes (you are required to pay half and your employees cover the other half) and also a Federal Unemployment Tax.
* Sales Tax : These taxes are levied on sales. You might be required to collect such taxes and remit them to the state and other states in which you do business if it is applicable for you.

MOST COMMON BUSINES TAX FORMS

We understand that taxes on Businesses get complicated. Some businesses rely on professionals who deal in taxes, for strategies on taxes and how to handle their tax filings. However, the more you understand these taxes, the better will you be able to work on yourself or with a Tax agent, taking full advantage of the laws and rights that you have.

We have listed the 10 most common and important Tax forms for you to go through.

1. FORM 1040

The Form 1040 along with other 2 subsections can be one of the most important tax forms that you file. It is the form in which you tally your total deductions and income. This helps you to calculate the actual tax that you file. The form is usually two pages long. However, there are over 70 + lines that you have to fill in addition with other forms. The most important of these are

* Form 1040EZ : This form is one page long and is targeted for people under the age of 65 years. It is for individuals who have simple tax filing situations and are not too concerned with deduction or credits. There is however an exception with the Earned Income Tax Credit. The total taxable income has to be under $100,000.
* Form 1040A : This is also in regard to simple tax occurrences. However, there is a twist. Although you cannot itemize over here, you are good to claim popular credits for taxes. You can also deduct the interest on student loan, contributions to IRA and some other things. Here also, your total taxable income has to be under $100,000.
* Form 1040 : This form can be used by anyone regardless of their filing status. Here you can claim and itemize all your allowable credits and deductions.

2. SCHEDULE A

This form is for you to itemize your deductions. This can include property taxes, mortgage interest, charitable contributions, state taxes, expenses related to medical issues and also has a myriad of other options. It has the power of reducing your total tax bill and is considered to be one of the most important pieces of tax forms.

3. SCHEDULE B

This form is for people who have investment income. It helps to tally all your taxable interest and dividends which should be over $1500, which you have received during the period of one year. The lower is the total amount, the lower is your tax bill. This one of the reasons why accounts which are tax advantaged like the 401ks and the IRAs are so valuable.

4. SCHEDULE C

This form is targeted towards freelancers and owners of small businesses. This form is what you use to report any contracting, consulting or freelancer work. It is also the place where you can be deducting expenses related to the development and growth of your business. This can be in the form of advertising, office supplies and even expenses for home office. There is a shorter C EZ form present where your expenses are below $5000.

5. SCHEDULE D

This form is concerned with investors. If you are trading in bonds, stocks or other financial instruments, this is the place where you will be tallying your capital losses and gains for the year. If you are like most of the investors in the US, you will have investments which worked out well for you and some which did not. You have upto $3000 of your net loss which can be deductible.

6. W4

This form is concerned with employers , which instructs them how much tax they should withhold from their employees’ pay check. This is the form where you calculate how much tax you are paying to your employer. As a business owner you should be taking this form carefully as this can lead you to over pay or under pay your taxes for the year.

7. W2

The W2 is a form for regular employees. If you are an employee, this form will help you understand how much money you earned, what sums you contributed towards your retirement plan and the amount of taxes which are withheld on your behalf. A copy of this also gets sent to the IRS so be sure that you check all the information.

8. FORM 1098

This form is targeted towards students and home owners. If you are paying a mortgage, you will get one of these forms delivered to your mail. It will show you the interest that you paid on the home year in a year. The mortgage interest is deductible, so you should be tallying the numbers correctly. Students might get a form named 1098 T. it contains all the tuition fees they paid or even a 1098 E, which shows the amount of interest they have paid on their loans. Tuition payments and interests on student loans can also be deductible.

9. FORM 1099

Generally speaking, this form is for multi taskers. There are different types of them, but the most common ones are the 1099 DIV, 1099 INT, 1099 OID and also a 1099 MISC. these show all the records of your income that you received from sources other than your current employer. A copy of it is also sent to the IRS, so you should be reporting it on your return statement. To describe all 4 in a nutshell

* 1099 DIV is for dividends and distributions generated from investments.
* 1099 INT is for reports that you have earned on your investments
* 1099 OID is for situations when you buy a note or bond which is less than the face value
* 1099 MISC is for ever other source of income not derived from any investments.

10. FORM 1040X

This form is for people who have made errors or mistakes on their previous forms. When you have filed your return and realized that you have made errors, this from can help to save you from any kind of hassles you might face. You will also have to include the forms in which you have made a mistake. This form has to be mailed to the IRS in the old fashioned way, so be sure you have a copy of all your supporting documents.

FINAL THOUGHTS

Business tax forms need to be a hassle when you understand the way it works. This article provides you a complete guide on the common tax forms for businesses out there. Filing taxes can be fun if you know what you are doing. Everybody likes having extra money on their hands and when you file taxes in the correct way, you will end up saving much more than you expected.