EP 12: What is English for "Tax Income Statements?"
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Translating Financial & Tax Legalese to English in 10 minutes or less. In today's episode, we walk you through all the tax forms, you are going to need to file your taxes.
In other words, what information do you as a U.S. resident or U.S. nonresident need to compile your tax information?
We promise by the end of the 10 minutes, you'll have a pretty good list of all the forms you need to make this tax filing season a success.
The speakers' views and opinions discussed in this episode, should not be considered financial, tax, or legal advice. Consult your advisor for any legal, cross-border tax, and financial advice.
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Speaker 1 (00:06):
Welcome to the International Money Cafe Podcast, the show where we filter out the noise on cross-border taxes, finances, and life in the us. I'm your host, Jen Hams, certified financial planner, founder and owner of elgon Financial Advisors,
Speaker 2 (00:21):
And I'm your host, man Nadi, enrolled agent, owner and founder of Amman Tax and Business Services. Join us on this journey as we explore the unique challenges faced by inbound outbound families and businesses on taxes, compliance, and financial planning. Let's get to the show.
Preparing to File Taxes: Forms and Information Required
Speaker 1 (00:43):
Hello. Today we are going to do one of what we're calling our new shorty episodes. In 10 minutes or less, we'll take a financial concept or tax concept in translate the financial and tax legal lease to English. This being tax season today, we want to spend some time helping you prepare to file your taxes and we're going to do this by talking about the forms and the information you need to take to your tax prepare as you prepare to file your taxes. This is filing taxes either as a US resident or US non-resident. To kick off this short episode, Manasa, what forms would you like to start talking about?
Tax Forms Required for Filing
Speaker 2 (01:31):
Thanks, Jane. Yes, that is very important is to be prepared for tax season and the best way to do that of course is to start with information gathering and good record keeping.
1099 Forms
Let me start out with all of the 10 99 series of income statements that you can expect to get. We have the 10 99 INT, the 10 99 DIV, which is for the interest and the dividends that you would receive from various different institutions like your banks or your brokerages or wherever else you have money invested. You will also get a 10 99 B for brokerage from your brokerage account where you have your mutual funds and all your ETFs, et cetera, and these statements will reflect your income from these investments and maybe stock sales for the year and also reflect what other information may be tax exempt bonds, et cetera that you held in these accounts. What about the next one, Jane?
W-2 Forms
Speaker 1 (02:40):
I'm going to talk about the W2. Almost everybody seems to be very familiar with the W2. So you get the W2 from your employer. It basically shows how much you've made at a particular job for the year. It will show what taxes were withheld if you contributed to things your 401k, all that information is going to be contained in the W2 as a non-resident in most cases. For example, F1 students and anybody else filing taxes as a US non-resident, you are going to receive a form 10 42 s. So this is sort of the equivalent of the W2, but because you don't have things like FI taxes withheld, this is why you get something a little different. Let me pass it back to you. What are the form do you want to talk about Melissa?
Deductions - 1098 Forms
Speaker 2 (03:32):
Yes, Jane. I would definitely talk about some of the deductions. Now, these deductions are important because if you are a US tax resident and if you are not aware, there are deductions that you can claim on your taxes. Some of these deductions are information that you keep track of during the year for which you do not get statements like maybe property taxes or charitable contributions, et cetera. But there are other deductions that are reported to the IRS via a form. Let's go with the 10 98 series. You have your mortgage interest that you pay on your mortgage for the year if you have student loans and if you have been paying on them now that the student loan forgiveness is gone, then you have the student loan interest. And if you are still in college, if you are taking master's classes or you have dependents who are in college or university, you will get a 10 98 T for tuition paid. And you can also expect to get some 10 99 from an HSA for plan distributions. And if you have used these plan distributions to spend on medical expenses, you will have to indicate that on your income tax return back to you Jane.
5498 Form
Speaker 1 (04:56):
Okay, so for anybody that's made an IRA contribution, a Roth contribution, you are going to get a 54 98, which actually believe it or not, is sent to IRS by your custodian and you don't get this form until end of may. Part of the reason why is because it goes all the way until the tax deadline. So if tax filing deadline is April 15th, you can actually make your contributions up until that date. Once you make that contribution, IRS gets a notice of that. But the key thing is you don't need to file this form, you just need to maintain it as part of your records. Okay. A different question for you Manasa. Now because we do have a lot of audience here, like we said, who are going to be filing as non-US residents or people who are here and they have overseas staff, what type of forms of information do they need to prepare or would they expect to have to be able to incorporate their overseas assets into tax filing?
Incorporating Overseas Assets into Tax Filing
Speaker 2 (06:04):
Oh, that's a good one Jane, and thanks for bringing that up to those listeners of ours who have information that needs to be reported and it is overseas, you must remember that US information is always on a calendar basis and you will need to gather your bank statements from overseas, your investment statements, and if you file tax returns in another country, then the foreign tax returns for those countries and this may need to be corrected to show the information for the calendar year. And I don't think I should use the word corrected really, but kind of reflect to show the information based off of the calendar year for US tax purposes. And this information definitely will not be in a form that you may be familiar with that is in the US like the ones we spoke about earlier. But because these statements are not sent to the IRS, we have to do our best to extract the right information that we need to be reported from these forms. Definitely overseas assets, these are the statements and information that you will have to gather, right, Jane?
Speaker 1 (07:24):
Yeah, and there's way more we can say about that, but we'll probably save that for another episode. But before we wrap up, what about business owners? What can they expect that could be a little different from maybe what an individual may be bringing to the table?
Speaker 2 (07:42):
Oh, cool. There's a lot to speak about what business owners need to do, but we may run past our shorty episode time limit for that. Let me just quickly say that if you are a business owner, it might be that you might get a 10 99 N EC or a 10 99 miscellaneous et cetera. If you are part of the gig economy and you have to make an effort to keep track of these income and expenses that you can write off against this income and depending on what type of income this is, you may have to file all of that on your 10 40 under a Schedule C, which reflects your business income. Yeah, that's definitely one of those. And if you are a business owner with stakeholding abroad, then everything that we just spoke about, which is overseas information holds true for your business, which is abroad as well.
Speaker 2 (08:45):
That's what business owners need to do. So yeah, Jane, I think the shorty episode we covered really quick. A lot of the information gathering that is really important for you to make sure that you're filing an accurate US tax return and you provide this information to your professional who is helping you do this. And like we always say, if US citizen living in the US or abroad or a tax resident of the US and you find the content we share useful, please share it with your friends and family. And please go to our website, the im cafe.com and subscribe so you can get intimations offa episode ahead of time. Thanks for listening. Bye bye.
Speaker 3 (09:38):
Thank you for listening to the International Money Cafe podcast. The content is for informational and educational purposes only and should not be used as a substitute for professional advice. Seek the advice of your qualified service provider with any questions you may have regarding your cross border finances and tax needs.