Paying taxes is important and tracking income whether you’re an employer or an employee is important.
There are certain things which matter such as year to date and other calculations which will help you track your earnings and make sure that you are always on the right track.
What are the Key IRS Tax Forms in 2022
1 – W-2
This form is used by employers to report an employee’s annual wages and the amount of taxes withheld from their paycheck. It’s important for employees to keep track of this form so they know how much money was earned and how much was withheld in taxes.
2 – W-4
The W-4 is the form that tells your employer how much money to withhold from your paycheck for taxes. This is an important form to keep track of because it will help you make sure that you’re having the right amount of taxes withheld.
3 – 1099-MISC
This form is used to report miscellaneous income such as royalties, rents, or prizes. This is important to keep track of because it will help you make sure that you’re paying the right amount of taxes on this income.
4 – 1099-INT
This form is used to report interest income such as from a savings account or investments. This is important to keep track of because it will help you make sure that you’re paying the right amount of taxes on this income.
5 – 1099-DIV
This form is used to report dividend income such as from stocks or mutual funds. This is important to keep track of because it will help you make sure that you’re paying the right amount of taxes on this income.
6. Schedule C
This form is used by sole proprietors to report business income and expenses. This is important to keep track of because it will help you make sure that you’re paying the right amount of taxes on this income.
7. 1099-NEC
This form is used to report non-employee compensation such as freelance work or contract work. This is important to keep track of because it will help you make sure that you’re paying the right amount of taxes on this income.
What Tax Forms are most important for employers?
1. W-2:
The W-2 is the form that employers use to report an employee’s annual wages and the amount of taxes withheld from their paycheck. It’s important for employers to keep track of this form so they can make sure that they are withholding the right amount of taxes from their employees’ paychecks.
2. W-4:
The W-4 is the form that tells employers how much money to withhold from an employee’s paycheck for taxes. This is an important form for employers to keep track of because it will help them make sure that they are withholding the right amount of taxes from their employees’ paychecks.
3. 1099-MISC:
This form is used to report miscellaneous income such as royalties, rents, or prizes. This is important for employers to keep track of because it will help them make sure that they are paying the right amount of taxes on this income.
4. 1099-INT:
This form is used to report interest income such as from a savings account or investments. This is important for employers to keep track of because it will help them make sure that they are paying the right amount of taxes on this income.
What tax forms are vital for independent contractors?
The most important tax form for independent contractors is the 1099-MISC. This form is used to report income that is not subject to withholding, such as income from freelancing or consulting. The 1099-MISC must be filed with the IRS by the contractor’s clients, and the contractor must report the income on their tax return.
Other important tax forms for independent contractors include the W-9 (used to request the contractor’s taxpayer identification number) and the W-8BEN (used by foreign contractors to claim treaty benefits).
In 2020, Form 1099 MISC has been replace in some components with 1099-NEC, 1099-NEC is used for nonemployee compensation. This is typically used for those in the gig economy, such as Uber or Lyft drivers.
Here are 4 key components of filing 1099-NEC:
1. The payer must have a valid Taxpayer Identification Number (TIN).
2. The payee must be an individual, sole proprietor, or unincorporated entity – not a corporation or partnership.
3. The payments must be for services performed in the course of the payer’s trade or business – not for personal use.
4. The payments must be made in cash, check, money order, or credit card – not in property or services.
Key Takeaways
If you want to keep easy track of your income, record your income or if you don’t have a formal payslip, you can create your own pay stubs to track it for proof of income. Proof of income is important whether you are an employer or an independent contractor. Check stubs help you stay on top of taxes and record your earnings properly.