IRS penalties for failure to file or pay taxes are onerous. Here’s what you must do.
What are schedules?
Schedules are documents required by the IRS for documentation of financial information. Schedules report income, deductions and business-related details.
The IRS requires individuals to report income on an annual basis. To collect this information, individuals must submit information on specialized documents. These documents are called schedules. They help individuals to submit accurate information and to calculate taxes properly.
- Schedule A is a specific type of form often required for individuals who are itemizing their deductions. It allows the user to document key expenses that may reduce their taxes. This may include medical or dental expenses, mortgage interest paid, contributions made to approved charities, and state taxes. It is also the schedule to report some work-related expenses.
- Schedule B is an income schedule. On this form, users document any interest or dividend payments received during the tax year. Schedules C and C-EZ are two other commonly used schedules that allow individuals to report self-employment income. It allows for the reporting of both earnings and any qualified deductions.
- Schedule D is used to report any sold capital assets during the year, such as reporting losses or profits from the sale of stocks.
- Schedule EIC allows individuals to claim earned income tax credits if they have an eligible child.
- Schedule SE allows individuals to report Social Security taxes paid as a self-employed individual.
Susan owns her own business. She must report her self-employed income to the IRS. To do so, she completes Schedule C to report income and Schedule SE to report the taxes she paid toward Social Security during the year. She finds she would also benefit from itemizing her deductions for the year because they are higher than the standard deduction. Susan fills out Schedule A, as well. She attaches these to her Form 1040 and submits it to the IRS.