| Every person who receives income of one kind or the | | | | The forms can be obtained from the public library or |
| other has to pay income tax to the government. Tax | | | | IRS. After selecting the right form, prepare the return |
| preparation involves a lot of calculation and prior | | | | using W-2s (wage and tax settlements given by the |
| planning. There are forms to be filled and submitted, | | | | employer), 1099s (dividend and interest forms given by |
| and refunds claimed from the IRS (the Internal | | | | banks, mutual funds and other investments), and other |
| Revenue Service). | | | | receipts. Attach all the required documents to the form, |
| The first step in income tax preparation is to choose | | | | including the payment voucher form 1040-V (if |
| the right form. There are several kinds of forms | | | | required). Make sure that you sign the form, and the |
| depending on the kind of income. The basic form 1040 | | | | social security number on the form is correct. |
| (or 1040EZ or 1040A) has to be filled by everyone, | | | | The main information required for income tax |
| apart from any other forms. Form 1040 is meant for all | | | | preparation is: personal data (social security number, |
| kinds of incomes, if the annual income is more than | | | | alimony paid and child care provider); employment and |
| $50,000. This form is also used for itemizing deductions | | | | income data (W-2 form, unemployment compensation, |
| when not applying the standard deduction. 1040EZ is | | | | miscellaneous income, pensions/annuities, jury duty pay, |
| for single people, or when married and filing jointly. The | | | | alimonies received, prizes/awards/lotteries/scholarships |
| applicant should not have any dependents, should be | | | | fellowships received, state and local income tax |
| less than 65, not blind, and have taxable income (from | | | | refunds); home owner/rental data; financial assets, |
| certain sources) of less than $50,000, with earned | | | | financial liabilities, expenses and self-employment data |
| interest of less than $400, and no itemized deductions. | | | | (if applicable). |
| Form 1040A is for people who have annual income of | | | | You can take the help of a professional income tax |
| less than $50,000, but have itemized deductions. | | | | preparer if: the tax preparation is too complex, the IRS |
| There are certain schedules generally used with 1040: | | | | questions you about something, or you want to save |
| Schedule A (itemize deductions); Schedule B (report | | | | time and effort. However, check for the preparer's |
| taxable interest or dividends in excess of $400); | | | | credentials. Any certified public accountant (CPA), |
| Schedule C or C-EZ (report profit or loss from a | | | | certified financial planner (CFP), or enrolled agent (EA) |
| business), Schedule D (report capital gains and losses); | | | | would be able to help. The National Association of Tax |
| Schedule E (report supplemental income and losses) | | | | Professionals (NATP) is a good source for finding a |
| and Schedule EIC (claim earned income tax credit). | | | | good Income Tax Preparer. |