IRS Form 1040: Understanding U.S Individual Income Tax Return

IRS Form 1040 is one of the most commonly used tax forms. If you brought in income last year, there’s a likelihood that you’ll have to file Form 1040 with the IRS. How do you know whether you have to file Form 1040, and what information do you need to complete it? Here’s a comprehensive guide on how to file Form 1040.

What is IRS Form 1040?

IRS Form 1040 is the standard form for individual taxpayers to file their annual income tax returns. Taxpayers must use the form to report all taxable income they received during the tax year. The IRS then uses the information provided to determine how much tax you owe or how much money you’ll receive on your tax refund.

Who Can File Form 1040?

In most years, Form 1040 needs to be filed with the IRS by April 15 (unless it falls on a weekend). Every person that earned an income during the prior tax year must file an income tax return on Form 1040, with some exceptions.

Furthermore, you may have to file Form 1040 if you received these types of income:

• Self-employment income
• Tips that weren’t reported to your employer
• Income you received from your role in a partnership, as a shareholder in an S corporation, or as a beneficiary of an estate or trust
• Insurance policy dividends (that are higher than your premiums)
• Interest received or paid on securities
• Distributions from a foreign trust

You may also have to file Form 1040 if one of the following apply:

• You qualify for the foreign earned income exclusion
• You qualify to exclude income earned in Puerto Rico or American Samoa, and you’re a resident of either
• You have an Alternative Minimum Tax (AMT) adjustment on stock
• You owe excise tax on stock with an expatriate corporation
• You owe household employment taxes
• You’re eligible for the premium tax credit

These are only a few of the situations that may require you to file an income tax return using Form 1040. If you’re uncertain about whether or not you have to file, consult one of our tax professionals right away .

Understanding IRS Form 1040

You may need a lot of information to fill out Form 1040. First and foremost, you’ll need statements of wages that you received from all of your employer’s during the prior tax year. Typically, these wages are listed on Form W-2 and mailed to you by the end of January.

You may also need to collect the following information:

• Social security numbers for you, your spouse, and dependents
• Dates of birth for you, your spouse, and dependents
• Additional wage statements (like Form 1099-S )
• Statements of interest or dividends (from banks and brokerages)
• Proof that you’re eligible for tax credits or deductions you’re going to claim
• A copy of your previous tax return
• Your bank account number and routing number (so you can receive your tax refund via direct deposit)

Form 1040 Deductions

Form 1040 allows you to claim a variety of deductions that shield a portion of your income from being taxed. There are a wide variety of tax deductions, and you should review them all to see which ones you qualify for. You can also choose between the standard deduction or itemized deductions. The standard deduction is a predetermined amount that’s dependent on your tax bracket. Itemized deductions are when you claim a variety of deductible expenses—it may be a better option for you if your deductible expenses exceed the standard deduction.

It can be difficult to figure out what you’re able to deduct, or whether or not you’d save more money choosing the standard deduction versus itemizing. Don’t hesitate to speak with a tax professional who will be able to sort through your finances and find the best strategy to maximize your tax savings.

Which Form 1040 Schedules Should I Use?

You may have to attach an additional form to Form 1040 if you’re going to claim certain deductions or if you have additional tax obligations. Here are a few of the schedules that you may have to include with your tax return.

Schedule 1

File Schedule 1 if you had any of the following during the tax year:

• Alimony income or payments
• Business income (you may also need to file Schedule C)
• Rental income (you may also need to file Schedule E)
• Farm income
• Unemployment income
• Educator expenses
• Deductible moving expenses
• Health savings account deduction
• Deductible health insurance expenses
• Student loan interest
• Deductible retirement contributions

Schedule 2

File Schedule 2 if you owe any of the following during the tax year:

• Alternative minimum tax
• Excess advance premium tax credit repayment
• Self-employment tax
• Taxes on IRAs, retirement plans, and other taxable accounts
• Household employment taxes
• Repayment of the first-time homebuyer credit
• Additional Medicare tax
• Net investment income tax

Schedule 3

File Schedule 3 if you plan to claim any of the following:

• Foreign tax credit
• Credit for child and dependent care expenses
• Education credits
• Retirement savings contributions credit
• Residential energy credit
• General business credit

What is IRS Form 1040-SR?

If you’re 65 years and older, you can opt to file IRS Form 1040-SR, instead. This tax form has re-designed look that features different colors and a larger font. It’s designed to help older taxpayers complete the form with greater ease.

Contact a Tax Professional for Assistance

Form 1040 is complicated. If you need help filing your taxes, don’t wait to reach out to a tax professional online or by calling (844) 325-4360.