When you get your W-2, you might rush to file your taxes to get your refund. However, if you do, you might later get a letter from the IRS telling you that you need to pay back some of that refund. If this happens, there were probably other tax forms that you should have been waiting for. Here's what you need to be looking out for to make sure your tax return is complete and actually ready to file.
Did you have income as a freelancer or contractor or from some other side job? That income will probably be reported to the IRS on form 1099-MISC.
Income on this form is tricky because it comes with additional self-employment taxes. There's also no tax withholding on this type of income. So if you forget about your 1099-MISC, you could actually go from receiving a refund to owing money.
1099-INT and 1099-DIV
If you earned interest or investment income, you should expect another tax form from your bank or credit union. Yes, this even includes those pennies you earned in your savings account.
These forms are easy to miss because some banks are just making them available online without sending you a notice. But if you do miss them, the IRS computers could reject your return and get you hit with penalties for not filing an accurate return.
If you're a homeowner, don't miss out on deducting the interest on your mortgage. This can knock a huge chunk of change off of your tax bill.
Calculating mortgage interest is tricky and might not match your monthly payments if the billing cycles don't match the tax year. Always make sure you have this form to do it right.
Health insurance now has to be reported on your taxes. If you don't report that you had health insurance, you could face a fine of several hundred dollars per person in your household.
The type of form you will receive depends on whether you received health insurance from your employer, bought it privately, or bought it on the federal marketplace. Carefully follow the instructions including entering payments for each month because you could be entitled to a tax credit if your income after tax deductions is below certain levels.
To learn more about how to make sure your tax return is complete, contact a tax preparation services accountant (such as one from Capital Accounting And Tax Service Inc) in your area today.