What is a 1040? This is a common question by individuals who have not yet been required to file an income tax return. This article has been drafted by a Denver tax attorney to assist those who do not know or have little experience with Form 1040.
Form 1040 is titled U.S. Individual Income Tax Return and is the form that most individuals are required to file to report their income and deductions and thus calculate their tax due to the United States Department of Treasury. First, the taxpayer will complete their name, address and taxpayer identification number, which is usually their social security number. Further, the taxpayer will state their filing status (single, married filing joint, married filing separate, head of household or qualifying widow) and the taxpayer’s exemptions and dependents. Dependent information such as name, social security number and relationship to the taxpayer is generally required. Thereafter, the 1040 is broken into sections, which are discussed below.
The taxpayer must state their income, which would include: wages, salaries, taxable interest, tax exempt interest, ordinary dividends, qualified dividends, taxable refunds or credits, alimony received, business income, capital gains or losses, other gains such as from the sale of business property, IRA Distributions, pensions and annuities, rental real estate income, royalties, partnership and S Corporation income, unemployment compensation, social security benefits and any other income. All these items are added together and the combined amount is your taxable income.
After you have calculated your total income, you now work to get to your adjusted gross income by making adjustments to your total income. Adjustments would include items like health savings account deductions, moving expenses, the deductible portion of self employment taxes, self-employed and qualified plans, the student loan interest deduction and tuition and fees. These adjustments are subtracted from your total income and thus give you your adjusted gross income, which is commonly referred to as AGI.
Thereafter you will calculate your tax and credits. You will either itemize your deductions or take the standard deduction and take the proper exemption amount and arrive at taxable income. You may be eligible for certain credits as well such as the foreign tax credit, child tax credit or other credits. There are also other taxes in addition to federal income tax which must be calculated. You may have self-employment tax, additional tax on IRAs or other taxes which must be calculated. After all the taxes have been calculated, you apply your payments. These payments may be from taxes withheld from your paycheck, estimated tax payment you have made or refundable credits. Your total payments are subtracted from the total tax and you will owe tax, break even or be due a refund.
Your tax return can be efiled with the Internal Revenue Service or mailed to the appropriate IRS Service Center, which will be stated in the 1040 Instructions.
If you have any questions regarding your 1040 Individual Income Tax Return, or other tax questions, you can speak with a Denver tax attorney at The McGuire Law Firm.
Contact the McGuire Law Firm to schedule your free consultation with a Denver tax lawyer.