Two of the biggest sources of relief when it comes to your income tax burden are your children and your business. Each offers a number of different opportunities for tax credits or deductions.

On top of that, however, you can actually increase the deduction for your children significantly when you own a business. By shifting some of your income to your children, you relieve some of your tax burden. There are even some ways to do this without a business, but having a business opens up a number of possibilities that are otherwise closed off.
That said, you need to do it the right way. Tax laws are fairly specific on how income can be paid to children, and you need to follow the rules if you want to stay out of trouble during an audit.

Here’s how you can get set up with income shifting today:

•In one scenario, income shifting means transferring property from one member of a family to another member who’s in a lower tax bracket. For example, if you have a stock that increases in value over the year, you might be responsible for paying the taxes at your current tax bracket. If you shift ownership to your child, it will fall into the lowest tax bracket.

•There are limits on the amount that can be gifted in this manner. The maximum gift can change each year, but has most recently hovered around $13,000. So, for example, you can exclude up to $13,000 from your Adjusted Gross Income for a single child. Each child could receive such a gift; you could with three children exclude $39,000 from your AGI. Your children will, of course, have to pay taxes on that amount, but it’s usually lower than what you’d have to pay.

•You need to watch out for the Kiddie Tax. This was a rule passed by Congress to close what some lawmakers believed was a loophole. For unearned income including stocks, interest, and cash gifts, there are further limitations. A child under 18 given a gift by parents pays no taxes on the first $850, then 15% on the next $150, then the parents’ tax rate above that amount.

•For those families who operate a business, a better option is often paying your family members. In this scenario, you put members of your family on the payroll of your company. As long as the child actually does some actual work, and as long as the pay is considered “reasonable,” it won’t cause any problems with the IRS.

•One of the sticky issues with paying children has to do with control of the funds. If a child is actually on the payroll, you need to be able to demonstrate that the child used the funds at their discretion. That can be accomplished by setting the child up with an actual checking account. Even if you charge them for room and board, there should be an actual record of these transactions.

•Another option is forming a family limited partnership. This divides the interests of your business among family members. If you transfer a portion of the ownership of your business to minor children, however, there must be an independent custodian that is appointed on the minors’ behalf.

•You may be able to make interest-free loans to your children. Here’s another way to shift some income to your children. Regulations allow you to loan a certain amount of money to a child, and they would then pay taxes on the assumed interest rate. Done early in the tax year, this could amount to a significant deduction.

•You also need to be careful about how much income you split with your children. If you provide too much to them via one of these methods, you may find yourself in a situation where you as a parent no longer provide above half of their support – which means you could become, in theory, unable to claim them as a deduction (or a child tax credit, depending on the year) for your own income taxes.

Having a family is almost always beneficial in terms of taxes; and for the small business owner, there are even more creative ways to turn your children into tax assets. Talk with your tax expert today, and see if there are ways you can utilize your children’s participation in your business as a way for everyone to be more profitable.

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There are a number of significant tax advantages to having a business, not the least of which is your automotive deduction. Yet, if you want to lower your tax bill and get the highest possible savings, you need to know exactly how to handle this. If you do it right, you’ll drive your tax bill lower. If you do it wrong, you’ll turn the wrong way and could end up in a head-on collision with an IRS audit.

Here are some car-related expenses and approaches that could save you money come tax time:

1.General business use. IF you have a vehicle that you use solely for the operation of your business, you can deduct the entirety of the cost of the vehicle. Of course, if you’re like most small business owners and you actually use your vehicle for both business and personal reasons, you can still only deduct the portion of the use that goes toward your business. So, if you have a catering business and a delivery van that you use exclusively for that business, you can deduct it all; if you have an SUV that you also use for family vacations, you can only deduct a percentage. The operating expenses usually covered in business use include gas, vehicle maintenance, car loan interest, repairs, and even auto insurance.

2.Business mileage. When you have a vehicle that you use for business part of the time, one option is to claim the current mileage rate. For 2011, that rate was 51 cents; it was 50 cents in 2010. The rate changes most years. It’s a standardized way to deduct the cost of using your vehicle, rather than actually itemizing out all of the direct costs for your vehicle. You do need to record the mileage as it’s shown on your odometer; if you estimate your mileage and are audited, you might find that the deduction is disallowed. (Even if you don’t have a business, you can usually deduct any mileage that you drive when doing work for charities, or even when you’re driving for medical purposes, such as driving a child to a doctor’s appointment.

3.Vehicle depreciation. Each year, your vehicle drops in value, or depreciates. If you use your vehicle for work, you can claim a certain percentage of this loss each year. There is a formula that your tax expert can help you use in order to determine how much this actually is. Many small business accounting packages will help you through this process, as well, so make sure you know how it works.

4.Expense of leasing a business vehicle. If you lease a vehicle to be used in the operation of your business, the entirety of the lease payment can be deducted. In most cases, you can even combine this with specific deductions, including the operating costs of the vehicle. You need to make sure you look closely at your options at tax time, in order to apply the deductions in the way that provides you with the lowest tax burden.

5.Vehicle sales tax. If you purchased a vehicle in 2010, there was a vehicle sales tax credit. You could deduct the state or local sales and excise taxes in late 2009. If for some reason you didn’t pay the sales tax until now or if you didn’t claim it in 2010, you may be able to fine an amended return. Here, as always, it’s best to talk to your tax professional about how best to handle this.

The key to getting the most from vehicle tax deductions for your business is this: you need to keep meticulous records. You need to be able to demonstrate to an IRS auditor exactly how and when your vehicle was used, and for what purpose. You need to track mileage religiously, keep all of your receipts, and make sure that if you claim a vehicle is only for business use that it truly is only for business use.
If you have any doubts about how best to use your vehicle to drive down your tax bill, talk to you tax expert today. He can help you figure out the optimal configuration for your tax bill, and help you identify the things you need to do to document your use and protect yourself in the event that you do find yourself being audited.

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When you have a home-based business, time is truly precious. Sure, you have the flexibility to do things that people who work a nine to five job can’t do, but you also often wind up working much longer hours, too. By the time you’re done working, there’s so little precious time to spend with family, the last thing you want to do is clean the house. For many small business owners, a housekeeper is just the solution they need.

Not only that, if you have a home office where you have customers or clients visit you, you want to make sure everything is tidy and presentable. Keeping your office in top shape is a legitimate business expense. That means tax implications.

Household employee or independent contractor?

The first thing you need to do is figure out if the housekeeper is your employee or if she’s an independent contractor. If you hire her through an agency, she’s the latter; if not, it may be a little more complex. (The IRS offers a guide on determining whether you have a household employee, and what your employment tax obligations might be.)

The long and short of it is this: if you have a household employee, you’re going to be paying employment taxes, and possibly withholding federal income taxes. If you have a contractor, you don’t have to worry about those things. In both cases, you can deduct some or all of your expenses.

If you incorrectly classify an employee, you can be looking at some serious penalties from the IRS. You need to make sure and thoroughly discuss the housekeeper with your tax professional so that you know which category he falls into. The same goes for taking out employment taxes if he does fall into the “household employee” category, otherwise you could be looking at having to pay back taxes as well as fees.

Home office expenses

If you’re already claiming business use of your home, you’ll have a much easier time of claiming a deduction for your housekeeper. The key is this: the same percentage of your home that’s being used for business is the same percentage of the expense you can claim for the housekeeper.

If you’re not claiming any business use of your home, you’re going to have a harder time claiming your housekeeper as a business expense. In fact, for most people, even if you own a small business and do some work at home, if you’re not claiming a home office deduction you might be hard-pressed to convince the IRS that the housekeeper is in some way performing work that is integral to your business.

An exception to this, of course, is if the housekeeper only cleans the portion of your home used for business. If you can prove that this is the case (a written contract with the housekeeper detailing what area is to be cleaned usually suffices) then you may be able to deduct the entire cost.

Working Parents Credit

There is another scenario in which you may be able to deduct the cost of your housekeeper. If you pay someone to clean your house, take care of your child, cook, or perform related tasks so that you can work or so that you can look for work, you may qualify for a credit for child and dependent care expenses. There are a number of restrictions on how this works, including family size and income, so make sure you talk to your tax professional about whether you qualify under this scenario.

This credit can cover up to 20 to 35 percent of the cost of your housekeeping, so it’s not going to allow you to deduct the entire expense. However, every little bit helps, and if you qualify you should absolutely take advantage of it.

The bottom line on deducting your housekeeper

It all boils down to this: if you have a home office, or if you have dependent children and meet certain income guidelines, you may be able to deduct a certain portion of the expenses you pay for your housekeeper.

Along the way, making sure you correctly classify your housekeeper is essential to avoiding trouble with the IRS. If she’s an independent contractor, she’ll have her own cleaning supplies, and she’ll probably have other clients or work for an agency. If not, and if you give specific directions about how the work is to be done, she’s probably a household employee instead.

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Chances are you run a business because you’re good at something and you like doing it, not because you enjoy filing receipts and entering accounting information. Yet, if you don’t take the time to keep your books current, you’re really hurting yourself. Not only will you have some serious headaches come tax time, you won’t really know how well your business is doing.

That said, you don’t want to spend more time working with the numbers than what’s absolutely necessary. Here are a few ways you can cut down on the busywork portion of bookkeeping and get back to doing what you do best:

1. Use a reliable accounting software package. There is a slight learning curve with implementing a solution like QuickBooks, to be sure. Fortunately, there are all sorts of training resources out there. The time that you spend learning to use QuickBooks will more than pay for itself in terms of efficiency later on. Even just using it to input checks, reconcile your various accounts, and create regular reports will be a huge boon to your business.
2. Don’t put off updating your records. Small business owners generally don’t enjoy doing the books. After all, you got into business because you’re passionate about something – and it’s not likely accounting. Still, by spending a few minutes each week to keep your records updated, you’ll save tons of time over the long haul.
3. Avoid using cash. Cash generates extra record-keeping, and puts you in a situation where you may lose out on various tax deductions because of a missing receipt. Debit cards really are the way to go, as they generate not only the receipt that you get at the point of sale, but the bank statement, as well. Obviously there are times when you need to use cash, but those instances are few and far between these days.
4. Keep your business and personal accounts separate. This is a major mistake that many new business owners make. Even if you’re a sole proprietor and your business income and expenses truly are your personal income and expenses for tax purposes, bookkeeping is much more difficult if your accounts aren’t separate. Keeping separate accounts will also help you down the road if you want to form an LLC, incorporate, or try to get loans or grants for your business.
5. Consider going paperless. By scanning in receipts, you can free up a significant amount of time over the long run. Not only that, there are a number of third-party applications that will allow you to attach scanned receipts to your QuickBooks data. The key here is to make sure you have reliable, regular backups of your accounting data. You should export that data regularly to an external hard drive or a flash drive, and consider storing it offsite or in a fireproof safe.
6. Find automated ways to track your business mileage. There are now a number of GPS-based smartphone apps that can track your business mileage for you. You simply start the app, indicate that you’re traveling for business, and it will track your mileage. This saves the hassle of manually working through logbooks, adding up miles, and keeping all of that paperwork organized.
7. Meet with an accountant and tax professional more than once a year. Ideally, you’ll meet with these professionals quarterly. At a minimum, you should do so twice a year. A single one-hour consultation each quarter could save you thousands of dollars on your tax bill for the year. One of the worst things you can do as a small business owner is decide that you’re going to handle all of the accounting and tax work on your own. It’s not that you can’t do it, it’s just that the time you spend will usually result in less positive results than if you hire professionals.
8. Educate yourself about what is and isn’t a legitimate business deduction. There’s no sense in spending time tracking specific types of transactions (apart from entering them into your accounting package) if they don’t fall into the right accounting and tax buckets. Learn about what expenses are deductible, and then make sure that you properly categorize them when you enter them into your accounting package.

Good record keeping pays off in several ways. It minimizes your tax burden and it helps you keep your finger on the pulse of your business. Implement these strategies today to make your record keeping a more efficient process.

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Question:

“I am doing a long term contract out of state 6 month. Car rental was to much, so I purchased a vehicle. Can I use the section 179 deduction how much of the vehicle purchase price can I deduct, and how much of my millage can I write off and are they different things. I pretty much drive the car to and from my apartment and work, to go eat or to the movies, or anything I would use my car at home for.”

Answer:

Certified Tax Coach, Eric Levenhagen, CPA CTC

Deducting the cost of your car and deducting mileage are two different options you have when taking vehicle deductions. Since this is the first year you owned the vehicle, you can figure the deduction both ways and see which one produces the better result.

For the standard mileage deduction in 2011, the rate changed after June (increased from $0.51 to $0.555 per mile) so make sure to separate miles driven from January-June and July-December. Since it sounds like you are in a temporary work location that you expect to last less than a year, I would be inclined to say the temporary work location rules apply to you. This means you can count the mileage from your apartment to your work location as deductible business miles (without this rule, mileage between home and work would be nondeductible commuting miles). Any other personal miles not relate to work would not be deductible – such as going out to eat or to the movies or any other personal errands.

For deducting actual expenses, you still need to add up all of your business miles so you can calculate the percentage of business use (BUP) that your car was used. For example, if you drove your car 10,000 miles during the year and 8,000 of those were business miles, then you can deduct 80% of all your actual car expenses. Actual expenses include depreciation, gas, insurance, maintenance (oil changes & car washes, etc), repairs, and loan interest. The section 179 deduction can apply as long as your car’s BUP is over 50%, but it is pretty limited. If this is a small passenger vehicle, like a sedan, the maximum depreciation you can take in 2011 is $11,060.

These rules can be fairly complex and I have only generalized them here. If you read this and have more questions, I highly recommend consulting with a professional who knows these rules and can guide you through them so you don’t leave any money on the table!

**The answers provided to submitted questions are intended to serve solely as discussion on various tax topics, with the understanding that the publisher and the expert/author are not engaged in rendering legal, accounting, or other professional service and that they are not offering such advice in their responses. They do not constitute legal advice nor are they a substitute for legal counsel. All questions may not be answered.

You work hard for your money. Whether it’s running your own business or working for someone else, you know that you’ve come by every penny honestly. And while you’re more than willing to pay your fair share in taxes, you don’t want to pay more than what’s absolutely necessary.

Fortunately, there are a number of ways to create tax-free income. Even if you don’t itemize deductions, you can still see significant tax savings in certain areas.

Here are some possibilities you might consider, especially if you’re right on the cusp of a higher tax bracket:

1. Obtain a cash rewards credit card. When you get cash back from a credit card, the income is tax-free. The key, of course, is to choose a card that you will pay off every month, and whose rewards you’ll actually earn. Some cards offer cash back on specific types of purchases (such as gas or groceries) while other cards offer general cash back rewards. The same actually goes for credit cards that provide airline miles as rewards, as well.
2. Open a Roth IRA for your child. Let’s suppose that you want to get your child started on a retirement fund while he’s still in college. You can give him up to the amount of income he earned that year – for example, he may have made $3,000 mowing lawns over the summer. If you put $3,000 into a Roth for him, it will become $99,000 by the time he’s 79 (assuming a rate of 6%). You’ve created significant tax-free retirement income for him.
3. Have a garage sale. If you can find $500 worth of old items you no longer want, that money comes in tax-free provided that the amount you’re selling those items for is less than what you paid for them. (If you make a profit, it’s technically a capital gain and you’d have to claim it on your taxes.)
4. Have a charity garage sale. Let’s say you plan on giving $600 to your local United Way. When you have that garage sale, put up a sign that says that the proceeds will go to the United Way. Give the money to the United Way, and you’ve earned that much tax-free for a donation you were going to give anyways.
5. Open a 529 college plan. Coming back around to your children, there’s the option of a 529 college plan. These plans let you set aside money for school for a children. They usually provide greater tax-free benefits than a Coverdell plan because there aren’t income limits as to who can have one, and most states will also give you a break on your state income tax for any money you put into the plan.
6. Remodel homes. If you have handyman skills, consider improving homes. You can buy a home, lets say for $100,000. You live in the home, and add $50,000 in improvements. You also do all of the improvement work yourself, perhaps $75,000 worth. If you sell the home for $225, the $75,000 in sweat equity isn’t taxed. Keep in mind also that you can profit up to $250,000 from the sale of a primary residence every two years.
7. Give gifts to your minor children. You can gift stocks to your children, who won’t be taxed on the capital gains unless it exceeds $950. Keep in mind that there is a limit on the gifting, however.
8. Use a Health Savings Account. An HSA is a wonderful investment, especially for a family. You can set money aside on a pre-tax basis, which then compounds tax free as well. You can use the money to then pay medical expenses. Not all employers have these, and if you have a small business you’ll want to opt for a MERP (Medical Expense Reimbursement Plan) instead.
9. Send in lots of rebates. When you make a purchase at a store that has a rebate, the amount you receive back isn’t subject to taxes.

10. Look into municipal bonds. Municipal bonds are a place you can put your money in a tax-free haven. However, understand that there are risks; around 19% of municipal bonds have defaulted over the past several years, so make sure that the municipality you’re investing in isn’t in danger of default. Be a smart shopper.

There are many ways you can create tax free income, depending on your skills, your financial situation, your income, and your desire. Check into one of these 10 options today, and reduce your overall tax burden.

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A couple of years back, the rules for deducting business-related entertainment expenses changed. The deduction was cut in half, only allowing you to deduct 50% of the expense. This was a bit of a blow to many small businesses, and since then we’ve all been trying to find ways around the 50% limit.

There are a number of different ways you can max out your entertainment deduction. Some of the most common include:

1. Entertain in your home, and conduct business. Your home is conducive to business. If there is a business intent to a gathering and business is discussed or conducted, you may be able to deduct the costs. Beyond that, however, if the business is in the form of a party for your employees or a sales seminar or presentation, you may be able to deduct 100% of the cost. Make sure to maintain clear records, as well as a guest list.
2. Give tickets to an event as a gift, rather than claiming them as entertainment. If you’re giving someone tickets to a sporting event, for example, you have a decision to make: is it entertainment or a gift? If it’s a gift, you can deduct the entire cost – but only up to a limit of $25 per person, per year. If it’s entertainment, you’re stuck with the 50% limit. Tickets, then, that cost more than $50 are better treated as entertainment than as a gift. Meals and lodging can also count as gifts, as opposed to entertainment, so you don’t need to feel limited to sporting events.
3. Make a meal company-wide. If you’re holding a lunch-time meeting and are providing food for your employees, 100% of that cost is deductible. This is different than if you take a subordinate out to lunch, which is only deductible at the normal rate of 50%. This would also apply to coffee, donuts, and even fruit baskets you give to your people; they all fall under the “De Minis Fringe Benefit” category, and are 100% deductible.
4. Attend charity entertainment events. If an event is organized specifically for the purposes of benefitting a registered 501(c)3 charity, donates its proceeds to that charity and uses volunteers to put on the event, then it qualifies. So, for example, a PGA tour event that donates proceeds to charity would qualify for the 100% deduction, while tickets to a college basketball game would not qualify for 100%.

Each of these options will let you deduct the full cost from a particular entertainment activity. When you’re planning events, maximize your entertainment deductions by trying to fit it into one of these categories.

What to watch out for

In addition to meeting all of the requirements that a meeting or event must have in order to be a business meeting, there are certain types of expenses that are never an option when it comes to entertainment deductions. Some of these include:

• Renting entertainment facilities. If you rent a hall to hold your annual holiday party, you can’t deduct the expense used to rent the facility. That includes any maintenance, cleaning, or security fees that you might have while renting the facility. The other expenses you occur in the facility – such as food or beverages – follow the normal rules for deductions, and what rate they can be deducted at.
• Expenses of non-business guests. If people who aren’t business associates – employees, clients, vendors, or the like – attend an event, you have to divide out the cost of those two categories. You can only deduct the cost of the business-related portion. That means if you have a holiday party and spouses are invited, you can’t deduct the cost of entertaining the spouses. The only exception is if you have a business purpose (i.e. not purely personal or social) for inviting the spouse.
• Membership fees or club dues. In years past, you could deduct the dues for membership in a country club or other organization where you gather together with business associates. If the purpose of the club is the entertainment of its members, or if it provides entertainment facilities for its members, it can’t be deducted.

Talk to your tax professional about your entertainment deductions, and how to optimize them for your business. A few simple changes to the way you handle a given event can mean the difference between being able to deduct half of the cost and being able to deduct the full cost of the event.

Tax rates, in other words the percentage of income you pay in taxes, vary depending on the sources of your income and the total amount of income you earn. The system was originally designed to be regressive, ensuring that the very rich would pay a higher percentage of their income in taxes than the very poor. The second reason was to encourage certain types of economic activity such as investment and home ownership.

Key concepts underlying your tax rate are “taxable income” and “tax bracket”.

Taxable Income

Your taxable income is based on your net income, that is your gross income minus deductions and exemptions. Gross income includes your salary, tips, gambling profits, profits from sale of goods or property, interest, and any other activity that brings in money that is not defined by the Internal Revenue Service as exempt. Once you have calculated your gross income, you subtract exemptions, such as those for dependants, and deductions, such as foreign taxes paid, charitable contributions, mortgage interest payments, business expenses, and any of the innumerable other special deductions found in the 6,000 page tax code.

Tax Bracket

Your tax bracket, or the percentage of income you pay as taxes, varies from 10% to 35% depending on your taxable income and marital and household status. So, for example, a single person earning $8,351 – $33,950 would be in the 15% bracket, but if you earned over $372,951 in income, you would be in the 35% bracket.

Unearned Income

Because profits from certain sources, including buying and selling houses or stocks, are considered capital gains rather than income, they are taxed at a 15% rate no matter how much money you make from them.

From the perspective of your tax return, a business loss is a good thing. A business loss reduces your overall income, and thereby reduces your income taxes. For many small businesses, properly planning your tax strategy for the year means identifying whether you have a net loss for your business.

Of course, there comes some risk with having a net loss; the IRS can take an active interest in businesses with a loss, especially those that have a loss year after year.

Here are some smart strategies for deducting and preserving your business losses, as well as some information you need to know:

• If you’re going to have a business loss, some deductions should be deferred. For example, you might choose to use section 179 deductions instead of regular depreciation for assets. Section 179 deductions can’t produce or increase a loss, and will carry over to next year.
• The IRS distinguishes between a hobby and a business. Tax experts have encouraged clients for years to convert certain hobbies into a business, resulting in a loss in order to bring down their income. The IRS, of course, has wisened up to this strategy. The general rule of thumb is that a business should report a net profit at least three out of every five years, otherwise it’s considered a not-for-profit-hobby.
• This means the burden of proof is high for new businesses. New businesses regularly have losses – sometimes significant losses – as they absorb startup costs. Depending on your type of business, you might have several years of losses before your business turns a profit. Be prepared for a fight with the IRS if you’re starting up your business and you’re not going to be showing a profit for the first several years.
• There are some specific criteria that the IRS uses to prove whether or not your business is motivated by profit, rather than being a hobby. For example, if you operate the business in a professional manner, you depend on the business for your livelihood, you can demonstrate attempts to increase profitability, or if you can expect a future profit based on appreciation of assets, you can still prove it’s a business not a hobby. There are a total of nine factors you can use to prove your profit motive, so become familiar with them in the event that you get audited.
• Losses in one year can optionally be carried forward to a subsequent year. If your business has a net operating loss of $20,000 this year, you can use that to offset a gain of up to $20,000 in a subsequent tax year. In this way, you can still have a business that’s profitable in one year (meeting the IRS’s guidelines of showing a profit three out of five years) yet keep the tax advantage from the previous loss.
• Carrying over a business loss puts restrictions on a change of ownership. For example, if you have a corporation with investors, you can’t change more than 5% of your ownership if you’re in a preservation plan. For many small businesses this isn’t a concern, but you do need to know that you’re locked in under a preservation plan.
• Good recordkeeping is key to preserving business losses. You need to make sure you’re documenting everything that happens in your business. That means not only the obvious financial record-keeping such as maintaining receipts and current books, but also documenting things like client meetings, bids or jobs you apply for, and more. It means conducting yourself in a professional manner and being able to prove that, as well.
• You need to be proactive about your tax plan. One of the best ways to maximize the benefits of a business loss is to be proactive. You need to look at your business throughout the year, and make decisions based on your tax situation. In some cases, making some last-minute purchases can put your business into a state of loss, especially if you’re just on the cusp between profitability and loss. If you have income from another source, you can also use that business loss to offset your tax burden, and keep yourself in a lower tax bracket.

A business loss can be a significant source of tax savings. However, you need to do it right. Make sure you consult with your tax professional in order to maximize your tax savings from a business loss, both this year as well as in the future.

Tax Forms for Individuals

The United States Internal Revenue Service requires that individuals file tax forms for various different types of economic activity. These forms can be printed out and filed as paper forms or filed online, using the IRS e-File option and FreeFile software. Below are listed some of the most important tax forms for individuals.

U.S. Individual Income Tax Return (Form 1040 series):
If you are a United States citizen or have earned income in the United States, you need to file Form 1040, 1040A or 1040EZ. Form 1040, depending on your individual circumstances, must be accompanied by various “schedules” (A through SE) detailing specific types of tax deduction. Non-resident aliens earning United States income file 1040NR or 1040NR-EZ.

Form 1040: Use if you have a taxable income of over $100,00 per year or will be itemizing deductions.
IRS Web Address: http://www.irs.gov/pub/irs-pdf/f1040.pdf

Form 1040A (“short form”): Use if your income is under $100,000 and you are taking a standard deduction rather than itemizing
IRS Web Address: http://www.irs.gov/pub/irs-pdf/f1040a.pdf

Form 1040EZ (“easy form”): Use if you no dependents and taxable income under $100,000 and are taking the standard deduction rather than itemizing
IRS Web Address: http://www.irs.gov/pub/irs-pdf/f1040ez.pdf

Other Forms:

Form W-2: Employers send employees and the IRS W-2s.

Form 1099 Series: Payers send you and the IRS 1099s to report non-wage income.

Form 1098 Series: Institutions to which you paid mortgage or student loan interest or tuition or made certain types of charitable contribution send you the 1098.

Form 5498 Series: Institutions with whom you have an IRA, ESA, HSA or MSA (Individual Retirement, Health Savings, or Medical Savings Account) send you and the IRS 5498s.

Other Useful Internal Revenue Service Web Pages:
Free File:
http://www.irs.gov/efile/article/0,,id=118986,00.html

Tax Information for Individuals:
http://www.irs.gov/individuals/