What are the Required Forms?

The purpose of a W-4 form. Employee’s Withholding Certificate is to give individuals a way to tell their employer how much tax to withhold from each paycheck. The employee fills out the W-4. Then the employer uses information in the W-4 to calculate how much tax to take out of each paycheck (and sends the taxes to the IRS and the state on the employee’s behalf).

Self-employed individuals do not need to complete the W-4 form, but should take similar efforts to estimate how much tax to withhold for the year.

The IRS released a new, simplified W-4 form in 2020. The simplified form is significantly easier and more logical than previous versions. To complete the form, an individual should provide basic information like name, address, and their estimated income for the year.

The W-4 also includes a section in which individuals must declare their (tax) filing status. The filing status impacts the amount of standard deduction an individual can claim, as well as the tax rate used to calculate how much tax is withheld. The W-4 has three tax filing statuses:

• Single or Married Filing Separately: Choose if you are (i)unmarried without dependents or (ii) married but filing separately from your spouse.
• Married Filing Jointly: Choose if you are married and plan to file your tax report with your spouse (e.g. one income tax report for both you and your spouse).
• Head of Household: Choose only if you’re unmarried and pay more than half the costs of keeping up a home for yourself and dependents.

The IRS provides guidance on how to complete the W-4 form, which can be found at: https://www.irs.gov/pub/irs-pdf/fw4.pdf

Another helpful resource on how to complete your W-4 Form is the website Nerd Wallet:

https://www.nerdwallet.com/blog/taxes/how-to-fill-out-w4/

Employers complete the W-2. Wage and Tax Statement form each year, to declare how much income an individual earned, as well as how much tax was paid to the IRS. Employers are required to provide employees with their W-2 by the end of January. For instance, employers must provide staff their 2019 W-2 form by January 31^st 2020. Employers may provide an electronic copy to staff or mail it to their home address.

Individuals use the information in their W-2 to complete their annual income tax report (Form 1040).

Self-employed individuals, freelancers and independent consultants do not receive W-2 forms. Rather, they should receive the 1099 form. A 1099 tax form is a record that an entity or person — not your employer — gave or paid you money. The payer usually has to generate the Form 1099 and send copies to you and the IRS.

Have questions about the 1099 form? Here’s a great resource from Nerd Wallet: https://www.nerdwallet.com/blog/taxes/what-is-a-1099-form/?trk=tax_sidebar_link

Form 1040 U.S. Individual Income Tax Return is the required federal income tax form people use to report their income to the IRS, claim tax deductions and credits, and calculate the amount of their tax refund or tax bill for the year.

There are two versions of the form: 1040 and 1040-SR. Individuals aged 65 or older should use 1040-SR. All others should use Form 1040.

The forms 1040 and 1040SR may be completed electronically or on physical paper and then mailed to the IRS. A copy of the form can be found on the IRS website: https://www.irs.gov/pub/irs-pdf/f1040.pdf.

To learn more about how to submit your Individual Income Tax Return, see "How Do I Submit My Federal Income Tax Return?"

If you plan to declare itemized deductions (rather than the standard deduction) or want to claim an itemized credit, make sure you save relevant documentation to support the claim.

For instance, if you plan to claim a credit for the amount of interest you paid on a student loan, you’ll need to save the annual statement provided by your loan provider which summarizes the loan payments you paid for the year.

For those who are home owners with a mortgage, you mortgage loan providers will also send you an annual statement, providing information about the payments an individual paid for his/her home mortgage.

As a good rule of practice, make sure to save annual statements provided by your bank and any loan provider. Individuals should also save any receipts that document medical expenses or charitable contributions that can be used towards a tax credit.