For various reasons, some of which are unknown to the taxpayers, tax forms keep changing, and your yearly tax return form isn’t an exception to this. While form 1040 is what you will be filling, there are certain instances where you will have to report some of your separate income on a separate form, or a different tax schedule. This is what is known as the schedule 2 tax form.
Historical background
Before 2018, taxpayers would choose among three forms 1040.1040A and 1040EZ. But the IRS figured out that this was cumbersome, so it created a simple and easy-to-use form 1040 that has various schedules. So, if there was a need to provide additional information which is no longer available in form 1040, the schedule 2 tax form can be used. After taking advice from IRS tax relief attorneys and tax accountants, the IRS found it good to condense some of the available schedules to create one form 1040 schedule 2 which was used starting from 2019.
What are IRS schedule 2 tax forms?
This form has two notable parts-tax and other taxes. However, this form is intended to be completed by taxpayers who include:
- Taxpayers who are classified as high income, and who owe the IRS an alternative minimum tax.
- Taxpayers are interested in repaying a small portion of tax credit for their health insurance marketplace.
- Taxpayers that owe taxes on top of the standard income taxes which include self-employment taxes.
- But remember that after filling the schedule 2, you should attach it to the form 1040-SR or the 1040-NR.
Part I of the schedule 2 tax form – Taxes
This section was initially recorded under lines 45 and 46 of the form 1040. However, in schedule 2, this information is found underline 1 and 2 and covers the following things:
- If you are a high-income taxpayer and owe ATM, that amount should be recorded in this schedule.
- If you have received a premium tax credit in advance for your health insurance, any excess advance credit facility will need to be recorded. You will complete the attached Form 8962.
- Then you will enter the totals of the first and second lines, and also key in these totals on the main form 1040,1040-SP or 1040 –NR, line 17.
Part II of the schedule 2 tax form – Other Taxes
This is where information that had been captured under schedule 4 in tax years before 2018. This part has a total of seven lines.
Line 4: This is for self-employed persons, and they are supposed to enter the taxes that they owe. This is the total which you owe for Medicare and social security taxes.
Line 5: Any amount that you received from an employer who didn’t deduct Medicare or Social Security taxes must be reported in line 5.
Line 6: In case you received taxable distributions early or made an excess contribution to a retirement plan, or any other tax-favored account, you should enter that amount here.
Line 7a: If you paid household employees, this is where you will fill to indicate if you owe any taxes.
Line 7b: This is where you enter homebuyer credit that was first received in 2008, provided that you are still repaying.
Line 8: This is where you list taxes that are owed somewhere else
Remember that with tax attorneys, you can ask all the simple questions about your taxes, and how you can present them in the right manner to the tax authorities to avoid unnecessary penalties.
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