About the IRS Form 1040
Internal Revenue Service (IRS) Form 1040, U.S. Individual Income Tax Return, is the standard form that most Americans use to file federal taxes. Although tax returns can get notoriously complicated, Form 1040 primarily consists of six main sections that you can complete to determine your correct tax consequences.
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Income Tax Return
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Although Form 1040 usually has numerous schedules and worksheets attached to it, the actual 1040 document is a simple front-and-back sheet that lists the final calculation figures derived from the underlying schedules. Along with this information your identifying features as a taxpayer are listed, including your name, address, date of birth, Social Security number, number of dependents and filing status.
Income
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Income is a broad category designed to capture all payments that were made to you as salary, wages, fringe benefits, retirement benefits, self-employment income, dividend and interest payments, business profit, and other income. Total income is the sum total of all of your incoming payments, while adjusted gross income is your total income less certain adjustments. Taxable income is your adjusted gross income less standard or itemized deductions and exemptions.
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Gains And Losses
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Gains and losses are income-adjusting entries resulting from profit or loss on investments, such as stock market losses. These are divided into long-term and short-term gains on losses, based on whether the corresponding property was held less than or more than a year, and are calculated on Schedule D, "Capital Gains and Losses."
Adjustments to Income
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Adjustments to income include contributions you make to traditional individual retirement arrangements, alimony pay and student loan interest you pay. Other common adjustments include deductions for one-half of the self-employment tax and for moving expenses.
Standard Deduction And Itemized Deductions
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A standard deduction is the amount of income the IRS allows you to reduce your adjusted gross income by to determine your taxable income. This amount varies based on your filing status, and was $11,400 for married couples filing jointly in 2009. Itemized deductions are allowed when they total more than the standard deduction in any given year. Items commonly itemized for deduction include state income taxes paid, mortgage interest payments, charitable contributions and business expenses. Itemized deductions are computed on Schedule A before being transferred to line 40a of the 1040.
Figuring Taxes And Credits
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After you compute your taxable income, including adjustments for the alternative minimum tax and any tax credits you are owed, you should use the IRS Tax Table or Tax Computation Worksheet to determine your total tax. Compare the tax payments you have already made with your total tax due to determine if you owe more tax or are due a refund. This amount should be entered on Line 72 of Form 1040 if you are owed a refund, or line 75 if you owe more tax.
Sign and Date
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After completing your Form 1040, you should sign and date the form at the bottom or else your return will be invalid. You can mail your completed return to the IRS, using the address found in your 1040 instructions, or you can file electronically. If you use tax preparation software to file your taxes, it will usually transmit your forms on your behalf, but if you want to file electronically on your own, you can use the federal e-file service found on the IRS website. If you e-file, you will sign your return electronically at the time of transmittal.
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