When filing a tax return, the income earned during the course of the tax year must be reported. The individual filing the tax return will report income with the tax forms that is furnished to him or her. If an individual is working for someone, they will be issued a Form W-2, Wage and Tax Statement. This tax form report income earned from wages, salary, and other compensation. This is going to be what’s used by a lot of the taxpayers.
For other types of income, for example, self-employment income, Form 1099-MISC is going to be used to report income. Same as Form W-2, income on Form 1099-MISC or any other Forms 1099 for that matter must be reported on federal income tax return.
Since there is more than 16 variations of Form 1099, you are most likely to use a couple of variations of it on your tax return. Most commonly, 1099-INT, 1099-DIV, and 1099-R is used by taxpayers. Learn more about the other variations of Forms-1099 from this article.
Use Tax Forms to Report Income
Regardless of the tax form you’re going to use to report income, they all must be together. If you’re filing a paper tax return, staple the tax forms you’re reporting on Form 1040 on the upper right or left corner. If you’re filing electronically though, you will need to import all the information on these tax forms onto Form 1040.
However, the way you report income can be quite different depending on the tax software you’re using. While some of the tax software only allows you to enter your information manually, some allow you to import it directly. Also, some of the tax software companies and financial institutions work together for you to import your financial information directly. If that’s the case, you will finish more than half of your tax return.
We’ve covered a large number of tax topics on our platform. Visit our federal income tax page to get the latest tax news.