Taxpayers and tax preparers must deal with a plethora of tax forms, some well-known, others more obscure. Knowing which ones you need (or your client needs) to file is vital to successfully fulfill your responsibilities and achieve the goal of an accepted return.
Almost everyone files some version of a Form 1040, sometimes with additional attachments called Schedules. For example, if you have unemployment income or gambling winnings, or business earnings, you will need a Schedule 1. This one is also required for taxpayers who have deductions for things like self-employment or student loan interest. A Schedule 2 is used if you need to pay the AMT (Alternative Minimum Tax), household employment taxes, or self-employment tax. Finally, taxpayers use Schedule 3 to claim certain refundable or nonrefundable credits, including for foreign taxes, education credits (both nonrefundable), and refundable credits other than the earned income credit, American opportunity credit, or refundable child tax credit.
In addition to the numbered Schedule forms, there are letters. For example, Schedule A collects the taxpayers' itemized deductions, while Schedule C reports profit and loss from a business, and Schedule D calculates capital gains and losses. The list is long and ranges from very common to less so.
It's worth noting that since most taxpayers and preparers file electronically, the tax software you use will automatically determine which Schedules you need to include. In fact, the ease of electronic filing may be part of the reason for the existence of Form 8948. According to the IRS, 75 percent of taxpayers now use electronic filing. Since that percentage includes those who complete the returns on their own as well as those who use a paid preparer, it's probably safe to assume that if you are paying someone to file your taxes, the chances are high that they are not completing paper returns on your behalf. The IRS touts the following benefits to e-filing:
- Faster refunds
- Easier filing
- Acknowledgment of receipt
- Secure transmission
- Payment options
- More accurate returns
IRS Requires Justification For Filing Hard Copy
Undoubtedly, the prevalence of electronic filing is more convenient for taxpayers and more efficient for the IRS. In fact, Form 8948 requires that paid tax preparers provide an explanation if they are filing a return for a taxpayer using paper forms instead of e-filing. The acceptable reasons include the following:
- The taxpayer requested a paper filing.
- The preparer has a religious objection (recognized organization) to electronic tax filing).
- The preparer has an approved waiver.
- The return was attempted via electronic filing and rejected (must include the reason for rejection and number of resolution attempts made).
- The preparer uses tax software that does not allow specific Forms or Schedules that this return requires.
- The preparer is not eligible to file electronically because they are a non-U.S. citizen with no social security number living abroad.
