1040 - it sounds like a police code from a cop show. But it’s the heart of the IRS’ taxation system for individuals.
We all know about them, but not everyone knows how to fill out 1040 forms.
Our team from Susan S. Lewis.Ltd put together some simple 1040 instructions. We’ll show you everything you need to know about this important tax document. Get to know more about other services together with Susan S. Lewis.Ltd.
What Is a 1040 Form?
So, what is a 1040 tax form? In short, it’s the document all individuals are required to file with the IRS to declare their annual income. Usually by mid-April.
Just a few years ago, there were several variations of 1040. People with very simple taxes could use the abbreviated 1040EZ or the 1040A. Today most everyone fills out the same 1040, sometimes referred to as the “long form.”
But where do you get a 1040 form? The easiest way to acquire one is to download it from the IRS’s website and print your own. But you can also request one at 1-800-TAX-FORM. Libraries and federal agencies also often have copies.
Who Should File a 1040 Tax Form
Who should file 1040? Almost everyone. It’s the IRS’s staple and the most common of tax forms.
1040 covers anyone who is:
- Single and makes more than $12,550 (under 65) or $14,250 (over 65);
- Head of a household and makes more than $18,800 (under 65) or $20,500 (over 65);
- Married filing jointly and making $25,100 (under 65) or $26,450 (over 65, one spouse) or $27,800 (over 65, both spouses);
- Married filing separately and making over $5 (under and over 65);
- Qualifying widow with a dependent making $25,100 (under 65) and $26,450 (over 65).
Other factors come into play with 1040, too.
If you’re self-employed and make over $400, you must file one. The same is true if you make tips or receive tax credits for health coverage through the Healthcare.gov Marketplace. Many retirement plans also make filing a requirement.
If you’re a partner in a partnership, a shareholder in a corporation, or an estate beneficiary, the likelihood is you need to file. Securities, dividends, trusts, insurance policies – there are so many factors that make 1040 a necessity.
If you have any questions about whether you need to file or not, you can get them answered using this IRS interactive tool.
What Form 1040 Schedule Should I Use?
While the IRS simplified 1040 a few years ago, there are still a handful of additional forms some people may need to file. Most everyone starts with the long-form. Some taxpayers also need to include other documents called “schedules.”
Schedule 1 covers additional monies that you might have earned or paid outside of the usual wages, bank interest, and dividends. These might come from a business, alimony, rentals, unemployment, or health savings. Schedule 1 might also include farm-related expenses and income, educational expenses, and some moving expenses. Student loans and retirement contributions also fall under this heading.
Schedule 2 accounts for additional taxes you might owe (not a favorite schedule, of course).
It’s often required of people in the upper tax brackets. Additional taxes might include:
- Alternative minimum tax
- Self-employment or household employment taxes
- Additional taxes on retirement plans like IRAs
- Additional taxes due on tax-favored accounts
- Repayment of the first-time homebuyer credit
- Unreported Social Security or additional Medicare taxes
- Some investment income taxes
- Repayment of any excess in the advance-premium tax payment
Added in 2018, Schedule 3 is for those who have additional credits to report. This is another form that affects many high earners. It’s used to report income from capital gains, real estate transactions, mutual funds, and corporate shares.
But it’s not only for those in the upper tax brackets. This is also where you report:
- Foreign tax credits
- Education credits
- Child Care expense credits
- Dependent care expense credits
- Residential energy credits
- Retirement savings credits
- Some business credits
Types of a 1040 Form
Even though the IRS simplified the 1040 and most people can get by with the standard long-form, there are a few other 1040 variations that apply to certain demographics. These include forms for seniors, freelancers, and nonresident aliens. There are also a couple of 1040 forms that cover other situations. We’ll explore them all below.
People who are self-employed or freelancers can use 1040-ES to help estimate their taxes quarterly. This can be a big help and save you from owing the government huge, single payments. Those with other types of income that are not withheld – interest, dividends, etc. – can also use this to help figure out what they owe. This group might also include people who elect not to have taxes taken out of their unemployment or Social Security benefits.
The NR in Form 1040-NR stands for non-resident. This form is required of people from other nations working or trading in the United States. It’s also used by representatives of deceased persons or estates that would have been required to file with the IRS.
From its larger type to color coding, Form 1040-SR is aimed squarely at Americans over the age of 65. Seniors pay on a different scale than younger people, and the IRS uses this form to simplify things. The federal agents even included an embedded standard deduction table to help keep filing as straightforward as possible for seniors, who enjoy a larger standard deduction.
Many people these days go online to pay whatever they owe in taxes. But some still prefer to do things the old-fashioned way and mail Uncle Sam a check. Form 1040-V is the “payment voucher” used in these instances. The IRS requires that it accompany your check so that its agents can match the payment to the return.
Form 1040-X is for use when you make a mistake on your tax return. Say you forgot to report a source of income. You’d file a 1040-X with the updated information. Any other errors would require this form, too.
How to File Form 1040: 2022 Instruction
There are a few common ways to file your 1040 form. You can download it and fill it out yourself. You can use tax preparation software to walk you through it. Or you can have a tax preparer handle it for you. Each method requires the following steps.
Specify Who You Are
This is where you fill out your demographic information, including your name, address, date of birth, social security number, and other identifiers. It’s also where you’d declare how you’re filing – singly or as a married couple, for example – and where you list your dependents.
Calculate Taxable Income
In step 2, you enumerate your various taxable income sources. These include wages, tips, retirement benefits, dividends, and other assets received that year. All of the taxable monies taken in to get added together and go toward your adjusted gross income.
Claim Your Deductions
Step 3 features all those helpful things that reduce the amount you owe to the government. Deductions here include things like medical and dental expenses, charitable gifts, state and local taxes, and large losses that can be written off in a federally declared disaster.
Determine Whether You've Already Paid Some or All of Your Tax Bill
Withholdings and previous tax payments can often reduce much of your tax bill. In this section, you explore how much you might already have paid. Sometimes you get lucky and find you not only don’t owe the government anything – it owes you a refund.
Enter Your Income
In lines 1-7, you list everything you made that year. You can find this information on the W2s sent by your employer. The form also asks for dividends, pension income, Social Security income, capital gains, and other taxable forms of money you made.
Calculate Your AGI
Once all your taxable income gets added up, you subtract standard deductions to figure your adjusted gross income. The federal government provides standard deductions for different types of filers, for example, single people, married couples, and heads of households.
Look Through Possible Taxes and Credits
Many people can claim other deductions and credits, and you’ll want to do so as it reduces the amount you owe. You can claim dependents, deduct qualified business income, and account for previous tax payments here. If you fill out Schedule A, you can make further itemized deductions.
Check on Your Refund
If you’re lucky, your deductions and credits – your total payments – will be higher than your tax due. That means Uncle Sam will owe you. Refunds are typically direct-deposited into bank accounts these days, so be sure to fill out your routing information.
Determine How Much You Owe
In many cases, however, you’ll be the one that owes the government money. This is the final step of Form 1040, and everybody’s least favorite. The IRS will allow you to set up a payment plan under certain circumstances, which makes payback a little easier.
Form 1040 is much easier to work with than it once was, but it can still be plenty confusing. It’s often worth turning to a professional for help. Our specialists from Susan S. Lewis, Ltd. will ensure everything gets filled out appropriately and filed on time. They’ll also often help you find deductions you’re entitled to that you might not ever figure out yourself. Save yourself the headache and go with a pro. Call now (630) 864-5549 or contact us online!