A quick primer on the most important IRS forms, from W-2s to 7004s.
Nearly everyone will send or receive IRS forms at some point, and that’s especially true for business owners. The full list of forms can be daunting, so here’s a quick explanation of some of the most common types you might need in your professional life.
|What kinds of forms are there?|
|Forms you might receive|
|Forms you might send|
So, what kinds of forms are there?
Forms you receive
Forms you send
Forms you might receive
Some forms will be completed by other people and given to you. These forms will contain information you need to complete your tax returns like recorded wages or other forms of income, so it’s important to hang on to these throughout the year.
Possibly the most well-known IRS form, Form W-2 is prepared by employers to report wages paid and taxes withheld. Employers are required to send them out to each employee far enough in advance for them to complete their tax returns on time.
But wait, what about W-1s? Don’t worry about it, we stopped using those in the 1950s.
Form 1098 series
The 1098 series is generally used to record payments you’ve made throughout the year, like interest on mortgages or student loans. There’s a variety of Form 1098 subtypes, a common example being Form 1098-T, used to record paid college tuition.
Form 1099 series
The 1099 series is used to record all income that isn’t salary, wages or tips. Any independent contractors, including freelancers and consultants, will be quite familiar with this form. Retirees will also be familiar with 1099-R, which covers distributions from sources like pensions, IRAs, and 401(k)s.
There are quite a few other variants (DIV, INT, NEC, etc.), but they’re often consolidated into a single page. Lucky you!
Forms you might send
These are the “doing your taxes” forms: the ones you (or a qualified tax professional) will be preparing and sending to the IRS.
Schedule A is used for itemized deductions. Schedule B is for, among other things, interest and dividends. Schedule D covers capital assets. The list goes on, which is another great reason to work with a tax professional.
Form 1065 is the income tax form for partnerships. It’s filed by a partnership to declare profits, losses, and deductions. In addition, partnerships need to file Schedule K-1 to declare the income going to each partner. You can think of the K-1 as a W-2 for owners instead of employees.
Form 1120 is used by C-corps to file their tax returns. Unlike other business entities, C-corps are taxed directly. Corporations with assets of $10 million or more are required to file taxes online if they weren’t doing it already.
As the name suggests, Form 1120-S is used by S-corps to file their tax returns. In addition to reporting profits, losses, and deductions, Form 1120-S tells the IRS how ownership of the company is divided up, which determines how much each owner owes on their personal income taxes. Similarly to Form 1065, these also use Schedule K-1s to declare the income distributions between the owners.
Form 2553 is how you tell the IRS that your corporation or LLC is electing to be taxed as an S-corp.
If you need an extension on Form 1040 (your individual income tax returns), this is the form for you. Remember, you still need to file Form 4868 by the due date of whatever you’re requesting an extension on.
This one is for extensions on nearly everything else. 1065s, 1120s, you name it. If you need extra time on your business tax returns, Form 7004 has you covered.
Are there other forms we haven't covered?
There sure are! We covered the most important, commonly encountered forms, but there’s plenty more out there. Try not to let that stress you out.
Do I ever have to file more than one of these forms?
Not everyone is technically required to file Form 1040 every year, but for paperwork reasons, everyone probably should.
If you’re a business owner (other than a sole proprietorship) you’ll need to file a form or two for your business, and if you’ve got more than one business, each one will need its own forms.
Which form do I use for my LLC?
LLCs can be taxed in a variety of ways, from sole proprietorships to partnerships to corporations. Make sure to check how your LLC is structured before filing your tax returns.
That’s a lot of forms, right? Luckily, most people only need to worry about a handful of them – whatever is most relevant to their work and their businesses. Just keep track of which types of forms your business requires and you’ll do fine.
And for maximum peace of mind, schedule a call with the tax professionals at DiMercurio Advisors and we’ll handle the complicated stuff.