Tax Form 1040: The BasicsPublished:
U.S. Individual Income Tax Return
For the majority of Americans, the most commonly used document for filing a tax return is IRS Tax Form 1040. This form is due by April 15 each year.
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While there are many supplements (i.e. schedules) for Form 1040 that calculate specific tax deductions and credits, most individuals will use Form 1040 as the basis of their income tax return.
Here is what’s covered on Tax Form 1040:
Basic Taxpayer Information
The first portion of Form 1040 is dedicated to collecting basic information about the taxpayer. This includes the name of the filer and their Social Security Number (SSN), plus the same for their spouse if they are filing jointly. In addition, you will need to provide other identifying information about yourself, including:
• Address: This must be a physical address, not just a mailing address.
• Filing Status: Indicate whether you are filing as single, married filing jointly, married filing separately, head of household, or qualifying widow/widower.
• Exemptions: List your personal exemptions, which includes one for yourself and your spouse (if married filing jointly), and one for each of your dependents.
Yearly Income Calculation
The next portion of Form 1040 calculates your income for the year. You will first report the income you received, and then make allowances for certain tax credits and deductions to arrive at your Adjusted Gross Income (AGI). For the income calculation, you must provide your total income from all sources, including:
• Taxable interest and dividends
• Business income
• Unemployment compensation
• Pension, IRA distributions, or Social Security benefits
Note that many people do not have to make any adjustments to their total income, which means their AGI will be the same number.
Taxes, Credits, and Payments
Once your AGI is calculated, it is reduced by the amount of your standard deduction (or itemized deductions) and personal exemptions to arrive at your taxable income (Line 43 of Form 1040). Your tax liability is based on your taxable income.
After determining your taxable income, you must factor in any tax credits (e.g., the Child Tax Credit) and additional taxes (e.g., self-employment tax). Then you will calculate your “total tax” by multiplying your taxable income by the applicable tax rate.
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Your total tax may be reduced by certain items in the “Payments” section of Form 1040. These can include the following:
• Federal income tax withheld
• Estimated tax payments
• Earned Income Credit (EIC)
• Additional Child Tax Credit
• American Opportunity Tax Credit (AOTC)
• Amount paid with request for extension to file
Tax Refund / Amount You Owe
The last section of Form 1040 establishes the total taxes owed or refund due. If a tax refund is due, you can provide your bank account information to receive your money from the IRS via Direct Deposit.
Finally, don’t forget to sign and date your tax return!
IRS Tax Form 1040 (U.S. Individual Income Tax Return): PDF
IRS Tax Form 1040 Instructions: PDF
IRS Publication 17 (Tax Guide 2014: Your Federal Income Tax): PDF