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- [Instructor] Let's talk about
a few very common IRS forms

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or statements that you are
likely to encounter in your life.

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The first one of these
you see right over here

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is called a 1098,

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and there are different
types of 1098 forms.

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There's a 1098, which is
to report mortgage interest

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that you have paid in the past year.

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There's a 1098-T, which is
for tuition payments or,

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or scholarships for students, 1098-E,

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which is about student loan
interest that you might pay

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and might be deductible.

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The whole point here is it's
about things that you have paid

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that might be deductible for tax purposes.

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So for example, this is a
situation where the person,

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it looks like they have paid $10,000 in

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mortgage interest that year.

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So assuming it is deductible for them,

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if they made from their job, let's say

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they made $50,000 in wages
from their job, given this,

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assuming it's tax deductible,

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what is going to be their
actual taxable income?

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Well, the way a deduction works
is you subtract it out from

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your income to come up
with a new number of

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what is going to be taxed.

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So your tax isn't gonna
go down by $10,000.

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Your to your taxable income is
going to go down by $10,000,

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which will reduce your taxes
by something less than $10,000.

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It's probably someplace around 10 to to 30

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or 40% of that $10,000, but
it's gonna be something less,

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but it will reduce your taxes.

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Similarly, a 1098-E if you
paid student loan interest

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and if it's tax deductible,
a similar thing might happen.

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Now, another form, which
sounds almost the same

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but is almost, you could really
think of it as the reverse

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of a 1098 is a 1099.

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A 1099 instead of reporting,

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say interest that you have
paid that is tax deductible,

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a 1099 reports interest

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or income that you have
earned from some sources

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that you now have to add
to your taxable income

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to make sure you're paying taxes on it.

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So right over here, this is a 1099-MSC.

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You could view that as
miscellaneous information.

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And what's that might be you,

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let's say you did an event for someone

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and they paid you money
or whatever it might be.

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They have to fill out this
form, report it to the IRS,

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and they, you could see
here that this person or

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or whoever's getting this
form, maybe it's you,

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you got $10,000 and that no
federal tax was withheld.

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So you're gonna have to report this

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and then also have to pay the
proportion amount of taxes.

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So once again, if you go
into that situation where

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before this 1099,

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if you had made $50,000 from your day job,

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well now you're going to
have to add this $10,000 to

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your income to get your
taxable income at $60,000.

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So this is, your taxes aren't
going to increase by $10,000,

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but your, they're gonna increase
by some proportion of that.

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But your taxable income is
definitely going to increase

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by $10,000 in this situation.

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And like a 1098,

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there's many different types of 1099s.

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There's a 1099-INT short for interest,

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which I get from my bank
every year, which tells me

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how much money I earned on
interest in those accounts.

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1099-DIV, which tells you about dividends

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that you might've gotten from investments,

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1099-G if you got payments

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from the government
that you need to report.

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So there's more, we could
go into more detail.

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You can look up the details,

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but the big picture is

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1099, 1098 I should say.

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These are things that you have paid many,

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many times in the form of
interest that might be deductible

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to your taxable income.

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And 1099, these are things
that someone is paying you.

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It's some form of income that
you need to get taxed on.