6 Ways To Fill Out Irs Form 8655 Correctly

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The IRS Form 8655 is a crucial document for reporting certain types of income and making estimated tax payments. Filling it out correctly is essential to avoid errors, penalties, and potential audits. In this article, we will guide you through the process of completing the IRS Form 8655 accurately and efficiently.

Understanding the Purpose of IRS Form 8655

Before we dive into the steps to fill out the form, it's essential to understand its purpose. The IRS Form 8655 is used to report certain types of income, such as:

• Interest, dividends, and capital gains
• Self-employment income
• Rental income
• Royalties
• Other types of income that are subject to estimated tax

The form is used to make estimated tax payments throughout the year, rather than paying a large amount of taxes at once when filing your annual tax return.

Who Needs to File IRS Form 8655?

You need to file the IRS Form 8655 if you expect to owe more than $1,000 in taxes for the year and you receive income that is not subject to withholding. This includes:

• Self-employed individuals
• Freelancers
• Independent contractors
• Landlords
• Investors
• Small business owners

Step 1: Gather Required Information

To fill out the IRS Form 8655 correctly, you'll need to gather the following information:

• Your name and address
• Your Social Security number or Employer Identification Number (EIN)
• The type of income you're reporting (e.g., interest, dividends, capital gains)
• The amount of income you're reporting
• Your estimated tax liability for the year

Step 2: Choose the Correct Filing Status

You'll need to choose the correct filing status for your IRS Form 8655. This will depend on your marital status, number of dependents, and other factors. The most common filing statuses are:

• Single
• Married filing jointly
• Married filing separately
• Head of household

How to Choose the Correct Filing Status

To choose the correct filing status, you can use the following guidelines:

• If you're unmarried or separated, choose "Single"
• If you're married and filing a joint return, choose "Married filing jointly"
• If you're married but filing separate returns, choose "Married filing separately"
• If you're unmarried but have dependents, choose "Head of household"

Step 3: Calculate Your Estimated Tax Liability

To calculate your estimated tax liability, you'll need to estimate your total tax liability for the year. You can use the IRS's Estimated Taxes webpage to help you calculate your estimated tax liability.

How to Calculate Your Estimated Tax Liability

To calculate your estimated tax liability, you'll need to:

• Estimate your total income for the year
• Calculate your total tax liability using the IRS's tax tables or tax calculator
• Subtract any tax credits or deductions you're eligible for

Step 4: Complete the Form

Once you've gathered all the required information and calculated your estimated tax liability, you can complete the IRS Form 8655.

How to Complete the Form

To complete the form, you'll need to:

• Enter your name and address
• Enter your Social Security number or EIN
• Choose the correct filing status
• Enter the type of income you're reporting
• Enter the amount of income you're reporting
• Calculate and enter your estimated tax liability
• Sign and date the form

Step 5: Make Estimated Tax Payments

Once you've completed the IRS Form 8655, you'll need to make estimated tax payments throughout the year.

How to Make Estimated Tax Payments

To make estimated tax payments, you can:

• Use the Electronic Federal Tax Payment System (EFTPS) to make online payments
• Mail a check or money order with a payment voucher
• Use a tax professional or accountant to make payments on your behalf

Step 6: Review and Update Your Form

Finally, it's essential to review and update your IRS Form 8655 throughout the year.

How to Review and Update Your Form

To review and update your form, you'll need to:

• Review your income and expenses throughout the year
• Update your estimated tax liability as needed
• Make additional estimated tax payments if necessary

By following these six steps, you can ensure that you fill out the IRS Form 8655 correctly and avoid errors, penalties, and potential audits.

We hope this article has been helpful in guiding you through the process of completing the IRS Form 8655. If you have any questions or concerns, please don't hesitate to comment below.

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