Tax Form Terminology

You have just learned about different types of taxes, like sales tax, property tax, and income tax. One thing we all have in common is the responsibility to pay taxes on any income we receive, whether it is from a job or even interest from a savings account.

In this article, we walk you through the key tax forms you will encounter throughout the year. Unfortunately, there is no logical explanation behind the naming of these tax forms, as the Internal Revenue Service (IRS) simply used whatever letters and numbers were available when the forms were created. But we can help create some fun associations to help remember them.

A journey through the world of taxes typically begins with your first job, so let's start there.

Congratulations on Your New job! Introducing the W4 and I9 Forms

With your new job comes some paperwork, including two very important forms: the W4 and the I9.

W4

The W4 form helps your employer determine how much income tax to deduct from your paycheck. You will answer a few personal questions, such as your marital status and whether you have any kids.

You can update your W4 form anytime your life changes during the year. Your employer will adjust how much taxes they withhold.

W4 (Wage-4): Think of the "w" standing for wage and ‍four, as in the four letters in work. Fill it out when you start a new job so your boss knows how much to deduct in taxes.

I9

The I-9 form ensures you can legally work in the United States. To fill it out, you will need a proper ID, such as a driver's license or passport.

I9 (Identification-9): Think of I for Identification. There are nine numbers in Social Security numbers, so it helps you remember that it is for proving you can legally work in the U.S.

Not a Job, but a Side Gig? Meet the W9

If you are working a side gig or as a freelancer – or if you are starting a new job as an independent contractor – you may need to complete a W9 form. This form gives your taxpayer identification number (or Social Security number) to the person paying you so they can report your income to the IRS.

W9: Focus on the "w" for work since it is related to work like the W4. Remember that the nine is similar to the I9 – you must fill out the W9 and I9 before you start a new job. You will use it when you provide your Taxpayer ID number for stuff outside your regular job.

January: Say Hello to the W2 and 1099 Forms

W2 Form

In January, your employer will send you a very helpful form called the W2. It tells you all about the money you made and the taxes pulled from your paycheck during the previous year. Make sure to keep it safe, as you will definitely need it when you file your taxes!

W2 (Work-2): Again, think of "w" for work or even wage. There are two copies: one for you and one for the tax authorities (IRS). This form reports the wages you earned and taxes withheld during the year.

1099 Form

If you receive any money from any other source, you will receive a 1099 form. This can be from your side job, contract work, or even from your bank for any interest you earned in your account.

1099 (10-99): Remember that it is related to the W9 (they both end with 9). It is the form received for various extra income. You can also think of 99 in it as standing for 99 ways you could earn extra money like side jobs, freelance, gigs, interest, dividends, even lottery and gambling!

January and February: Paying for College or a House? Here Come the 1098 Forms

If you have any educational expenses or you are a homeowner, there is a useful form called the 1098. This form details mortgage interest or college expenses and will arrive during January and February. 1098 form is very helpful because it can help lower your taxes.

Remember the 1099 form as the one that shows all your extra income? Now, the 1098 form is one less than 1099 (1098 = 1099 - 1), which you can remember as a way to subtract or lower the amount in taxes you owe.

The 1098 form helps by reporting your tuition and mortgage interest payments, which could lead to tax deductions.

April and the 1040 Form: The Finale of Tax Season

This timeline shows a typical order of tax forms you will encounter starting with your job.

As they say, all things must come to an end, especially when it comes to taxes. The grand finale for wrapping up taxes is usually in April. This is the day you'll need to complete the 1040 form, letting the government know about your income and nailing down your final taxes for the year.

Remember, the 1040 form uses all the information you have collected from your W2s, 1099s, and other forms. Once you complete it, you will know if you owe taxes or if you are getting a refund.

Many people get their taxes out of the way before the April deadline, but it is the last call to get them done.

To remember the 1040 form, consider it the "10-4" moment in the movies. In classic walkie-talkie lingo, "10-4" means "got it" and signifies the end of communication. Now, simply add a "ty" after "4," and you have connected with the form's name: 10-4ty.

When you file your 1040 form, you are telling the government, "10-4, got it!" and wrapping up your annual income communication with them. Just like the "10-4" in the movies, it is a quick and memorable way to know you have reached the end – nothing more after. In this case, it's the end of your taxes for the year.

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Source: Khan Academy, https://www.khanacademy.org/college-careers-more/financial-literacy/xa6995ea67a8e9fdd:taxes-and-tax-forms/xa6995ea67a8e9fdd:tax-forms/a/tax-forms
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