What are tax forms? (Part 2)
About this video
Three forms help you fill out your income taxes: the W-2 summarises what an employer paid you and withheld; 1099 forms report other income such as contractor pay, bank interest and dividends; and the 1098 documents money you paid, like mortgage interest, that may be tax deductible.
You'll be able to
- describe what a W-2 shows.
- explain when someone would receive a 1099.
- explain what a 1098 mortgage interest statement is used for.
Key words
- W-2
- A yearly summary from your employer of what you were paid and what taxes were withheld.
- 1099
- A form reporting income that isn't from an employer, like contractor pay, interest or dividends.
- 1099-MISC
- A 1099 for miscellaneous income, such as payments to an independent contractor.
- 1098
- A form documenting interest or other payments you made that might be tax deductible.
- Mortgage interest deduction
- Being allowed to subtract interest paid on your home loan from your taxable income.
Transcript
- [Instructor] In this video, we're gonna go into some forms that are very useful when you are filling out your income taxes. If you work for someone as an employee, first and foremost, you're going to get a W-2 form. And I always find the W-2 form interesting.
You typically get it at the beginning of a calendar year so that you have it in time to file for your taxes. But it's a nice summary of what you were paid, and what was withheld, either at a federal level, for federal income tax, for social security, but you also see things, like state taxes withheld on top of that.
And so this is just a nice summary, and for a lot of folks, this is all the information that you're going to need, if you don't have really complicated things in your life, if you don't have a mortgage, if you're not a landlord. if you're not an independent contractor, you're gonna be able to fill out most of your taxes usually using just this form right over here.
Now, a lot of folks have income above and beyond the wages, tips and other compensation that you get from your W-2 or that you get from your employer, and that will show up in some form of a 1099. So this is an example of a 1099 for miscellaneous information, M-I-S-C, MISC, 1099 MISC, right over here.
But there are 1099s for, say, interest you get on your bank account, there are 1099s for dividends. A 1099 can be useful, let's say if you're an independent contractor, So you're getting income, it's not coming from an employer, it's coming from some type of a company that hired you to do something, but they're not giving you benefits, et cetera.
So a lot of folks might have a 1099 of some form for that other income, that income that you're not getting from your employer, and you'll get one 1099. Let's say you have two bank accounts, they're each giving you interest, you'll get one 1099 from each of those.
Once again, very useful when you're filling out your taxes. Now, the last form I'm going to show you is most relevant, well, especially this version right over here, a 1098 is actually to document interest that you have paid to other parties, or other types of money outflows, I should say, that might be tax deductible.
So this one right over here, this 1098, is a mortgage interest statement, in many cases, the interest that you pay on the mortgage on your actual house, so not a rental property, not a second house, but on your actual house, that is oftentimes interest deductible.
And there might be even cases where some of those other examples where the mortgage interest is actually deductible as well. But this one, when you get this statement from whoever you're paying your mortgage payments to, whoever you're borrowing from, this will also be useful when you are filling out your taxes to even see if you qualify for that mortgage interest deduction.
So I'll stop there. There's many other tax forms, but these are the ones that most people are going to encounter.
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