The Form 990 provides the public with financial information about a given organization, and is often the only source of such information. It is also used by government agencies to prevent organizations from abusing their tax-exempt status.
Public Inspection IRC 6104(d) regulations state that an organization must provide copies of its three most recent Form 990s to anyone who requests them, whether in person, by mail, fax, or e-mail. Additionally, requests may be made via the IRS using Form 4506-A, and PDF copies can often be found online on sites such as Foundation Center's 990 Finder and Guidestar.org.
The Form 1040, U.S. Individual Income Tax Return, is the starting form for personal (individual) Federal income tax returns filed with the Internal Revenue Service (IRS) in the United States. The first Form 1040 was published for use for the tax years 1913, 1914, and 1915. Beginning with the tax year 1916, Form 1040 was converted to an annual form (i.e., updated each tax year with the new year printed on the form).
Any full-time resident individual U.S. income taxpayer can use the standard Form 1040 (often referred to as the "long form" to distinguish it from the other 1040 variants). Those with uncomplicated tax situations (for example, no itemized deductions, no capital gain or loss, etc.) may be able to use the simplified Form 1040A (the "short form") or the even simpler Form 1040EZ (the "easy form") instead of Form 1040. Some versions of Form 1040 are colored blue (though not the case when tax return software packages are used).
Income tax returns for individual calendar year taxpayers are due by April 15 of the next year. Should April 15 fall on a Saturday, Sunday, or holiday, the returns are due on the first succeeding day that is not a Saturday, Sunday, or holiday. If Patriots Day (a state holiday in Massachusetts) falls on the Monday in question, then filers in southern New England and some parts of New York State have until Tuesday to file, since the IRS processing center for these areas is located in Andover, Massachusetts. Generally, income tax returns for fiscal year taxpayers (an individual taxpayer may choose a fiscal year other than the calendar year, though this is uncommon) are due on or before the 15th day of the fourth month following the close of the fiscal year (if the 15th falls on a Saturday, Sunday, or holiday, the return must be filed by the next business day).
Form 1040 consists of two full pages not counting attachments. The first page collects information about the taxpayer(s), dependents, income items, and adjustments to income. The second page calculates the allowable deductions and credits, tax due given the income figure, and applies funds already withheld from wages or estimated payments made towards the tax liability.
Form 1040 has 11 attachments, called "schedules" (Schedules A and B are printed on opposite sides of the same sheet), which may need to be filed depending on the taxpayer:
For Tax Year 2006, the 1040 went to press before legislation was final, and some lines are "missing". The "Tuition and Fees" deduction, Educators expenses <= $250 deduction, and State Sales Tax (on Sch A) do still exist, but need a special notation to include them. The IRS will not be able to E-file such a return until Feb 2, 2007.
In most situations, other Internal Revenue Service or Social Security Administration forms such as Form W-2 must be attached to the Form 1040, in addition to the Form 1040 schedules. There are other, specialized forms which may need to be completed along with Schedules and the Form 1040.
The 1040A (nicknamed the "short form") is a shorter version of the Form 1040 U.S. individual income tax return. Use of Form 1040A is limited to taxpayers with taxable income below $100,000 who take the standard deduction instead of itemizing deductions.
A taxpayer who uses the 1040A tax return can only have income from the following sources:
Several other restrictions apply as well.
The Form 1040EZ, Income Tax Return for Single and Joint Filers with No Dependents (nicknamed the "easy form"), is a simplified, six-section Federal income tax return, issued by the United States' Internal Revenue Service. Its use is limited to taxpayers with taxable income below $100,000 (as of tax year 2006) who take the standard deduction instead of itemizing deductions.
Other restrictions for 2005 include:
Form 1040EZ was introduced by the Internal Revenue Service for the 1982 tax year. The title of the 1982 form was "Income Tax Return for Single filers with no dependents."
The form 1040EZ-T is a special form for the 2006 tax filing year only. It allows taxpayers who paid the telephone excise tax, but do not otherwise owe any federal tax or have a requirement to file a tax return, to file a simple tax return to request a refund of the telephone excise tax. Despite the form's simplicity, filers have a choice of either the standard tax credit amounts ranging from $30 to $60, or attaching form 8913.
The Amended U.S. Individual Tax Return, commonly known by its number (Form 1040X), is used to make corrections on Form 1040, Form 1040A, and Form 1040EZ tax returns that have been previously filed.
Generally for a tax refund, this form must be filed within 3 years after the date that the original version was filed, or within 2 years after the date that the tax was paid, whichever is later. For a 1040X based on a bad debt or worthless security, it must be filed within 7 years after the due date of the original version. A 1040X that is filed immediately before the due date of the original version is considered "on time".
Form 1040X is similar to Form 1040 except that it has three columns: One column to list the amounts from the original version, one column to list the net increase or decrease for each line being changed, and the last column to list the new amounts.
Certain "financial timing" type changes cannot simply be made with the 1040X, and must be requested through the much more complicated form 3115 "Change of Accounting Method". The least obvious (and most common!) example of such a restricted change is in correcting past years business or rental depreciation. Beyond that, form 3115 also lists over 50 other specific change types. Many of those include classic bookkeeping concerns, such as when to recognize revenue and expenses.
The Form 1098, Mortgage Interest Statement, is used to report interest that a taxpayer has paid on his or her mortgage. Such interest is tax-deductible at the federal level, unless the taxpayer is subject to the Alternative Minimum Tax.
Each payer must complete a 1099 for each covered transaction. Three copies are made: one for the payer, one for the payee, and one for the IRS.
'Examples of report amounts paid to independent contractors (in IRS terminology, such payments are nonemployee compensation''). The ubiquity of the form has also led to use of the phrase "1099" to refer to contractors themselves. U.S. tax law requires businesses to submit a Form 1099 for every contractor paid at least $600 for services during a year. This requirement usually does not apply to corporations receiving payments.
Many businesses and organizations must file thousands of 1099s per year. Thus, payers who file 250 or more Form 1099 reports must file all of them electronically or magnetically with the IRS. The 250 or more requirement applies separately for each type of return and separately for each type of corrected return. Even though filers may submit 249 information returns on paper, the IRS encourages filers to transmit returns electronically.
If the less than 250 or more requirement is met, and paper copies are filed, the IRS also requires the payer to submit a copy of form 1096. The 1096 is a summary of information forms being sent to the IRS. You need one 1096 for each type of information form you have issued.
For further information refer to Publication 1220, Specifications for Filing Forms 1098, 1099, 5498 and W-2G Magnetically or Electronically or Publication 1187, Specifications for Filing Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. The IRS no longer accepts 3 1/2-inch diskettes for filing information returns, and tape cartridges will be phased out after Tax Year 2007. After December 1, 2008, electronic filing will be the ONLY acceptable method to file information returns to the IRS at its computing center in Martinsburg, West Virginia. One can upload 1099 returns to the IRS using their FIRE (Filing Information Returns Electronically) web site at fire.irs.gov Form 1099 is also used to report interest (1099-INT), dividends (1099-DIV), sales proceeds (1099-B) and some kinds of miscellaneous income (1099-MISC). Blank Form 1099s and the related instructions to the forms can be downloaded from the IRS website.
Payees use the information provided on the 1099 forms to help them complete their own tax returns. In order to save paper, payers can give payees one single Combined Form 1099 that lists all of their 1099 transactions for the entire year. Taxpayers are usually not required to attach Form 1099s to their own Federal income tax returns unless the Form 1099 includes a report for Federal income tax withheld by the payer from the related payments.
Variants for Form 1099
As of 2007, several versions of Form 1099 are used, depending on the nature of the income transaction:
Information Reporting Forms Filed In TY2006
The form is used to report income, proceeds, etc., only on a calendar year (January 1 through December 31) basis, regardless of the fiscal year used by the payer or payee for other Federal tax purposes. The returns must be filed with the IRS by the end of February immediately following the year for which the income items or other proceeds are paid. Copies of the returns must be sent to payees, however, by the end of January.
The law provides various dollar amounts under which no Form 1099 reporting requirement is imposed. For some Form 1099s, for example, no filing is required for payees who receive less than $600 from the payer during the applicable year.
The issuance or non-issuance of a Form 1099 in a particular case is not determinative of the tax treatment required of the payee. Each payee-taxpayer is legally responsible for reporting the correct amount of total income on his or her own Federal income tax return regardless of whether a Form 1099 was filed.
For a variety of reasons some Form 1099 reports may include amounts that are not actually taxable to the payee. A typical example is Form 1099-S for reporting proceeds (not gain) from real estate transactions. The Form 1099-S preparer will report the sales proceeds without regard to the amount of the taxpayer's "basis" in the real estate sold. (Basis is usually the amount of cost incurred by the taxpayer when he or she acquired the property, perhaps years before the sale, plus the cost of any tangible improvements made). The taxpayer's basis amount is deducted by the taxpayer (on his or her own tax return) from the proceeds amount to determine the gain (if any) on the sale.
In any case, the payee-taxpayer remains responsible for filing an accurate Federal income tax return.
An amount in box 5 most likely means that the account has some money in it that was already taxed before being deposited in the account. Ordinarily, funds in qualified plans are exempt from taxation when deposited, but taxed when withdrawn. The amount already taxed can usually be distributed without being taxed again. To accomplish this, either of two methods are used to divide that non-taxable portion across an actuarial remainder of the retiree's life.
Box 7 "Distribution code", describes the nature of the distribution. The least restrictive code to find here is "7"; for normal, penalty free distributions to the qualified owner..
Form 2553, Election by a Small Business Corporation, is used in the United States income tax system by small businesses to elect to be treated (taxed) as a "Subchapter S - Corporation" ("S-Corporation"). This form is also used to allow an entity whose default is something other than a corporation under the check the box regulations to elect to be taxed as an S-corporation. Previously, an entity had to file both the Form 8832 (to elect to be taxed as a corporation) and the Form 2553.
A U.S. citizen or a U.S. resident alien living in a foreign country is subject to the same U.S. income tax laws that apply to citizens and resident aliens living in the United States. For those who qualify, however, Form 2555 can be used to exclude up to US $82,400, in 2006, and US $ 85,700, in 2007, of foreign earned income. Also, it can be used to claim the housing exclusion or deduction. A filer cannot exclude or deduct more than their foreign earned income for the tax year.
The "earned" part of the exclusion means you had to actually work to earn the excluded income. Interest, Dividends, Rental Income, etc. cannot be excluded.
The 2006 tax law changes voted by Congress significantly decreased the benefit of the exclusion. This was a last-minute addition to the tax bill by Senator Charles Grassley, Republican of Iowa. The subtle language and last-minute timing allowed it to slip in. Grassley's previous attempt in 2003 to remove the exclusion entirely failed.
5498: IRA Contribution Information
5498-ESA: Coverdell ESA Contribution Information
5498-SA: HSA, Archer MSA, or Medicare Advantage MSA Information
Form 8822 is used to report a change of address to the Internal Revenue Service.
Form W-2, Wage and Tax Statement, is used in the United States income tax system as an information return to report wages paid to employees and the taxes withheld from them. The form is also used to report FICA taxes to the Social Security Administration. Relevant amounts on Form W-2 are reported by the Social Security Administration to the Internal Revenue Service.
Employers must complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. The Form W-2 reports income on a calendar year (January 1 through December 31) basis, regardless of the fiscal year used by the employer or employee for other Federal tax purposes. However, this refers to the time period in which an employee has been compensated, not necessarily the actual dates of employment. After the final payroll in December, employment is normally compensated and subject to tax in the following year.
If an employee works in more than one state, most employers will print multiple, mostly redundant W-2 sheets to report the pay divided out to each state it was earned in. Some employers will print multiple rows of states on each and all of the W-2 copies. Other employers, when confronted with an employee that lives in one state and works in another, print a W-2 that attributes the whole gross wages twice, once for each state. This form of statement, entered as is, causes many tax programs to tax the income twice on a state return.
The form consists of six copies:
Employers are instructed to send copies B, C, 1, and 2 to their employees generally by January 31 of the year immediately following the year of income to which the Form W-2 relates, which gives these taxpayers about 2 1/2 months before the April 15 income tax due date. The Form W-2, with Form W-3, generally must be filed by the employer with the Social Security Administration by the end of February.
Form W-4 is a tax form used by the United States Internal Revenue Service. The form is used by employers to determine the correct amount of tax withholding to deduct from employees' wages. Ideally, this amount will exactly equal the annual tax due on the 1040 series related to employment compensation, though in reality, many times it is off by a substantial amount.
When filling out a Form W-4, an employee calculates the number of Form W-4 allowances he or she will claim, based on his or her expected tax filing situation for the year. For each Form W-4 allowance taken, the amount of money withheld as Federal income tax is reduced. This, in turn, reduces any tax refund for which he or she may be eligible (i.e. the funds were never withheld in the first place), or conversely raises one's liability for taxes due. No interest is paid on over-withholding. Penalties are imposed for under-withholding beyond a certain threshold. The IRS Withholding Calculator can also calculate withholding allowances more exactly.
One point of confusion is the number of Form W-4 withholding allowances oftentimes does not equal the number of Form 1040 exemptions. Although the Form 1040 exemptions and Form W-4 allowances are otherwise similar, one additional W-4 allowance is allowed for having only one employer. Should a person have two employers, he or she may either forfeit this allowance with both employers, or retain it with the one providing the highest annual compensation, and forfeit two allowances ("one employer" and "self") with the second employer. Using the latter method could result in lower overall withholding, and a closer approximation of the actual taxes due.
The W-4 form does not include any provision for the part-year employment method. This must be requested in writing to an employer in addition to the W-4. The part-year method may be used when continuous employment (including unpaid days off) during the current calendar year is less than 245 days (i.e. commencing on or after May 1). Certain restrictions apply, such as prior employment in the same calendar year. See IRS Publication 505 Chapter 1 Page 8. The cumulative wage method is used in a retroactive manner if one's Form 1040 exemptions change during the calendar year upon submission of a revised W-4. Employers are not required to use either method if it is too complex for their system of accounting. However, they must override an employee's previous W-4 with information on a newly submitted W-4 for all tax withholding in the future.
If too little tax is being withheld for any reason, line 6 on the W-4 form allows the employee to withhold any stated amount per pay period. (This is simple enough that all employers must oblige.) Alternatively, or in addition, the employee can send quarterly estimated tax payments directly to the IRS (form 1040-ES). Should the employee have additional income (e.g. investments) not subject to withholding (or insufficiently withheld), the latter may be mandatory whenever payroll withholding falls short. Those claiming exemption from all withholding on form W-4 line 7 will likely hear from the IRS seeking further documentation. Nevertheless, someone earning annually (from all taxable sources) less than his or her total Standard Deduction and Personal Exemption(s) does not have to have any tax withheld (subject to someone else claiming him or her as a dependent).
The W-8BEN form (entitled Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) is used in the United States taxation system by foreign individuals to certify their non-American status. The form, issued by the Internal Revenue Service, establishes that one is a foreign, non-resident alien or foreign national performing work outside the United States, in order to claim tax treaty benefits such as a lower amount of tax withholding from dividends paid by U.S. corporations. The W-8BEN form should be given to the withholding agent such as a stock broker, and not the IRS.
Many non-US entities (notably private Canadian companies with no US presence) who sell goods to US Customers are often asked by the US Customer to fill out a W-8BEN form in order to receive full payment. There is much confusion on this subject, as the US Customer believes that it must withhold some amount of the payment to the non-US supplier if there is no W-8BEN on file - while the non-US supplier feels that it has no exposure to the US IRS because it is performing no taxible service within the US to justify tax withholding. In this regard, the guidelines should be clearer for how or why foreign suppliers (or Canadian suppliers) need to file W-8BEN with US customers.
Form W-9, Request for Taxpayer Identification Number and Certification, serves two purposes.
1) It is used by third parties to file an information return with the IRS on reportable payments made to others. It requests the name, address, and taxpayer identification information of a taxpayer (usually in the form of a Social Security Number or Employer Identification Number - either number is considered a Taxpayer Identification Number or TIN as it is commonly called).
The form is never actually sent to the IRS, but is maintained by the person who files the information return for verification purposes. The information on the W-9 and the payment made are usually reported on a Form 1096 or 1099.
2) The second purpose is to help the payee avoid backup withholding. The payor must collect withholding taxes on certain reportable payments for the IRS. However, if the payee certifies on the W-9 they are not subject to backup withholding they generally receive the full payment due them from the payor. This is similar to the withholding exemptions certifications found on Form W-4 for employees.