Federal tax forms are issued by the Internal Revenue Service (IRS) and used by businesses, organizations, and individuals to report various types of financial information to the federal government of the United States. There are many more tax forms than the 1040 or W2. Those who own a small business are likely to use a number of IRS tax forms. It is critical that businesses submit the proper tax forms and documentation to avoid stiff penalties and costly fines.
Common Types of Tax Forms Used by Businesses
The most common of federal tax forms is the 1040, the basic tax return used by individuals as a starting point for reporting all personal income. Small businesses will likely use one of the many attachments, or schedules, used for a number of different business purposes. For example, the Schedule C is used by sole proprietors to list self-employment income and expenses.
A farmer would likely use Schedule F to report any income and expenses associated with farming. If a business partner wants to calculate and report self-employment taxes from self-employment income, they would use a Schedule SE form or possibly a 1065 form. Some businesses use a form 1120 for C corporations or a form 1120S for S corporations to report the necessary tax information.
The W2 Form
This is an information return used to report the amount of employee wages paid and the amount of taxes withheld from each employee. FICA taxes and payments to the Social Security Administration are also reported using this form. The W2 form consists of six copies which are submitted to the Social Security Administration, the state and local taxing authorities, and any employees to be used in filing their own personal taxes.