Knowledge is Power it sounds corny, but it's true. Most people don't have a clue when it comes to IRS rules and regulations. And naturally, few people have knowledge of the countless forms and documents the IRS requires taxpayers to fill out. So get out your pen and take notes, the more you know about the IRS the better.
The Top 3 Forms: These are the top 3 most requested IRS Forms according to the IRS.
1. Form W-9 Request for Taxpayer Identification Number and Certification
Form Purpose: Use this to retrieve your Taxpayer Identification Number (ITIN)
How it Saves You Money: Failure to Furnish your correct ITIN to a requester can result in a $50 penalty.
If you provide a false ITIN number with no reasonable basis to back you up, you may receive a whopping $500 penalty! Misuse of ITINs or falsifying information can result in civil and criminal penalties.
2. Form W-4
Form Purpose: This form lets your employer withhold the correct Federal Income Tax from your pay.
How it Saves You Money: Be honest with yourself. If your employer doesn't withhold your taxes, will you take the initiative and withhold the taxes from your income? Probably not. And if the IRS doesn't get their cut, you could end up with a massive debt. If you have not filled out a W-4 form yet, let your boss know you need one A.S.A.P!
3. Form 1040 U.S Individual Income Tax Return
Form Purpose: Use this form to report your annual income to the IRS, as well as your annual deductions.
How it Saves You Money: You need Form 1040 to receive your tax returns and itemize deductions. If you do not turn in Form 1040 and/or Form 1040 A annually you will be fined and penalized. This is one of the most important IRS Forms.
Why it's important: The IRS has to handle thousands of taxpayer's issues annually. The IRS is not designed for “customer service,” they are not going to patiently handle your issue for you. That means it's your responsibility to request information and handle your account. Knowing what forms to request is a huge step in the right direction.