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What are tax forms? (Part 2)
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.
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1st one to comment. Why did nobody comment?(2 votes)
First one to answer! No one commented maybe because no one likes taxes.(2 votes)
- Where on a tax form would I find how much taxes my I owe for my pets?(1 vote)
Pets are not taxed in the USA. W-2 forms are not issued elsewhere.(2 votes)
- can we get taxed if we are freelancers and the source of income we get is not from a company or anything?(1 vote)
- As a law-abiding citizen (if you're not law-abiding, then ignore the rest of this answer), you report your income to the IRS on your return. It doesn't matter if it came from free-lancing as a journalist, a photographer, or a deejay. If you had income, you tell the IRS and you pay the tax on it.
Keep in mind that when the gangster Al Capone was sentenced to prison, he went NOT for murders or for other criminal activity, but because he could not account for all the money he had on hand, for which there was ample evidence, although he had not reported the income on his tax returns.
So, abide by the law, or not. That's up to you as a citizen. Keep Capone and Alcatraz in mind as you make your way through life.(1 vote)
Video transcript
- [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.