Navigating the tax filing process requires attention to detail, and understanding the key tax forms for the year is essential. From reporting income to claiming deductions and credits, taxpayers must be familiar with the forms necessary to fulfill their tax obligations accurately. Optima Tax Relief gives a breakdown of some key tax forms to pay attention to in 2024.
Table of Contents
Form 1099-INT
Form 1099-INT is a tax form used to report interest income received during the tax year. The form is typically provided by banks, financial institutions, and other payers of interest income to individuals who have earned more than $10 in interest from interest-bearing accounts such as savings accounts, certificates of deposit (CDs), or bonds.
Because Federal Reserve rates have been high, so have interest rates. So, while 2023 was a great year to earn interest on savings, it has the potential to result in a shocking tax bill. Taxpayers who receive a Form 1099-INT must report the interest income listed on the form on their federal income tax return. This income is typically reported on Schedule B (Interest and Ordinary Dividends) of Form 1040 or Form 1040-SR. Depending on the amount of interest income earned, taxpayers may also be required to report it on their state income tax return.
Form 1099-MISC or 1099-B
Form 1099-MISC is a tax form used to report miscellaneous income earned by an individual or business during the tax year. It is typically provided by payers to individuals or entities who have received payments of $600 or more for rents, prizes and awards, royalties, or other income. Form 1099-B is a tax form used to report proceeds from broker and barter exchange transactions. It is typically provided by brokers or barter exchanges to taxpayers who have sold stocks, bonds, mutual funds, or other securities, or who have engaged in barter transactions, during the tax year. Among these sources of income include cryptocurrency, which the IRS has taken a special interest in recently.
Since 2019, the IRS has been asking taxpayers about their digital assets, including cryptocurrency, when filing their tax returns. For 2023, you must report digital assets if you sold cryptocurrency, traded a coin for another, or received digital assets for a payment, reward, or award. Financial institutions may send Form 1099-MISC or 1099-B. They may send no form at all. But taxpayers should be warned that reporting when necessary is crucial.
Form 1098-E
Form 1098-E is a tax form used to report student loan interest paid by the taxpayer during the tax year. It is typically provided by lenders or loan servicers to individuals who have paid $600 or more in interest on qualified student loans. As a reminder, student loan repayment began again in late 2023. This means that more taxpayers are also able to claim the student loan interest deduction in 2024.
Taxpayers who receive a Form 1098-E may be eligible to deduct up to $2,500 in student loan interest reported on the form on their federal income tax return. The deduction for student loan interest is an “above-the-line” deduction, meaning it can be claimed even if the taxpayer does not itemize deductions. However, there are income limitations and other eligibility criteria that taxpayers must meet to claim the deduction.
Conclusion
Understanding the key tax forms for 2024 is crucial for taxpayers to accurately report their income, claim deductions and credits, and fulfill their tax obligations. By familiarizing themselves with these forms and gathering necessary documentation, taxpayers can navigate the tax filing process with confidence and ensure compliance with IRS regulations. As always, consulting with a tax professional can provide additional guidance and support to taxpayers as they prepare their tax returns for the year.
