To calculate income tax liability, taxpayers need documentation of income, documentation of tax withholding throughout the year, demographic information, health-care coverage information for those on certain plans and receipts for deductions and credits. Taxpayers use documents to calculate tax liability based on filing status.Continue Reading
Income from salary is on a W-2 tax form, which each employer must supply to an employee. Those that work as independent contractors use an income report form from those who hire them for services. Taxpayers who are sole proprietors, or self-employed, must keep track of profit and loss statements to report income earnings on the Schedule C tax form. Employees also find information for tax payments on a W-2. Sole proprietors typically make quarterly tax payments throughout the year, while independent contractors do not have tax withholding.
Documentation for credits and deductions depends on the individual program. For example, credits for charitable giving require a receipt or other proof of donation to a qualifying organization. Taxpayers on federal or state Marketplace programs must provide documentation of medical insurance coverage through form 1095-A. Those with private or company-supplied insurance coverage only need to indicate minimum coverage on the income tax form. Filing status includes marital status and number of dependents.Learn more about Income Tax