In the United States, organizations are required to report tax information for payments made during the year for wages and non-wage payments to the Internal Revenue Service. As this is the largest area of growth for reporting and growth, it possesses the highest number of regulations and requirements, handed down by both the federal government and individual states. Currently, there are over 30 different kinds of tax information returns required by the federal government in the United States. These returns are the principal cross checking measure that the IRS uses to confirm tax return accuracy for individual taxpayers.
The W-2 form is the form used by and most famililar to the greatest percentage of the population. The W-2 shows earnings and any other form of recompense paid to employees. In addition, there are a number of other forms used to report non-wage income, and also to report income that could entitle a taxpayer to claim a credit on their tax return. The non-wage forms include the 1099 Forms -there are 16 kinds - the Forms 1098 - four kinds - and the three types of Form 5498.
Each tax information return accounts for a different kind of payment or transaction. Many are used for more than one type of transaction. Each return has its own guidelines on when, what, and the amount to report, making it difficult to track reporting obligations. The intricacy of these forms and their individual guidelines are one of the primary reasons many filers use third party information reporting software.
Form 1099-INT is used for reporting interest paid on deposits at financial institutions, such as banks. It is also used to report some other interest related to businesses as well. Form 1099-S is used to report real estate sales. Form 1099-R is used for income from pensions, annuities, retirement and profit-sharing plans, IRA accounts, and some insurance types. Forms 1099-DIV, 1099-B and 1099-OID report a range of investment earnings and transactions. Form 1099-MISC is a virtual catch-all used for a variety of payments, including rent, crop insurance proceeds, royalties, medical treatment payments, income from fish that are sold for cash, and payments for business services.
Form 1098 reports interest on a mortgage; Form 1098-T is for reporting tuition and other educational fees and expenses; Form 1098-E reports interest on student loans; and Form 1098-C is for reporting the value of a vehicle that has been donated to a charitable group.