Did you know that the Federal Government collected $4.05 trillion in taxes in 2021? Many people wonder exactly how the government gets to that number by using the different methods to collect taxable income. Newcomers to taxpaying may even wonder which parts of their income are taxable, and at what rates.
Because the taxation system seems to get more confusing every year, we have this helpful guide on tax statements and 1099s. If you want to know where to get 1099, how the system works, and how you should go about filing your taxes then check out these 5 helpful pieces of information.
1. There are Different Types of Tax Statements and 1099s
A 1099 form is handed out to you when you earn an income unrelated to your employment. Your employer will deduct the PAYE tax straight off your salary, but the IRS needs you to declare extra forms of income that you receive.
Some of the more popular 1099 forms include the 1099S form (which relates to profit from the sale of real estate) and the 1099-INT form for interest earned from investment accounts.
2. Not Everyone Needs a 1099
When you work for a salary or a wage your employer already deducts income tax and pays the IRS on your behalf. If your only source of income is from jobs with this arrangement then you don't have to file a 1099 form. However almost everyone with savings will have to file the 1099-INT form for any interest, so best check with your accountant to see which forms you should be receiving.
3. You Can File Electronically
These days the IRS is trying to encourage citizens to file their forms electronically as much as possible. This is easier for them to process and allows the tax process to run smoothly. It's also easier for you, as you avoid queues and can file your taxes on a platform that operates 24/7.
4. The IRS Also Gets Every 1099 You Do
If an institution sends you a 1099 form they are required to send a copy to the IRS as well. This usually happens in the two weeks between January 31st and February 15th, after you get your copy. If you have queries about the information on your 1099 form you can contact the IRS directly to correct errors or ask questions.
For example, a realty company will send the same 1099S tax form you get to the IRS. This also helps the IRS detect tax evasion.
5. You Can Contact the IRS if You Need Help
When you encounter a situation where you're unsure about how to proceed with your filing, you can contact the IRS directly for help. They may speak to anyone paying taxes on your behalf, advise you on particular issues, and let you know about the state of your tax returns
You can phone the IRS or contact them over the web. The IRS website also has FAQ pages and other useful information for people who enjoy doing their own research and filing.
Stay On Top of Your Taxes
No one likes paying taxes, but they are an important part of a well-functioning society. Remember to file your taxes on time and make sure you know which types of tax you're eligible to pay as well as those rates. If you discover you've overpaid, underpaid, or missed a form then contact the IRS immediately.
When you make a profit from selling real estate or earning a rental income, you have to declare it when you're filing taxes. If you want your properties professionally managed, check out the services and information available on our owner's page.