Form 1040 is the base tax form that all filers must use when they file federal income taxes. There were multiple versions of the 1040 in the past but they were consolidated into one version starting in the 2018 tax year. Depending on your tax situation, you may also need to attach other forms or schedules to your 1040. This allows you to do things like claim specific deductions or to report certain types of income. Read on for a closer look at the 1040 and what you need to do in order to use it.
Why the 1040?
For your 2019 taxes, which you file in early 2020, you will need to use the Form 1040 to report your income. There is only version of the 1040 this year and all tax filers must use it. (Previously, filers with simple tax situations could use the 1040EZ or 1040A. These forms are no longer in use because of the new tax plan that Trump and Republicans passed in late 2017.) The only exception is that nonresident aliens use 1040NR.
Filling out Your 1040
There are two pages of the 1040. The first page asks for your basic personal details. This includes your name, address, Social Security number (SSN) and filing status. If you’re filing jointly, you also need to add the name and SSN of your spouse.
Filers with dependents need to add the names, SSNs and the relationship (to the filer) of each dependent. There is a box beside each dependent that you can check if you’re claiming the child tax credit or credit for other dependents.
You will also see a box that you should check to certify that you, your spouse (if you file jointly) and all of your dependents had qualifying health care coverage or a coverage exemption for all of the year.
The final part of the first page requires you to sign and then write in your occupation. You should do this after you have completed the rest of the form. If you work with a tax preparer to file your 1040, your preparer will also sign and enter his or her information.
Entering Your Income
Next up, on the second page of the form, things get a bit math-y. Lines 1 through 7 are all about your income. If you have a W-2, you will need to enter the earnings information from that form. You also need to attach any and all W-2 forms you have. Then you will enter information on any interest, dividends, pensions, annuities, individual retirement account (IRA) distributions or Social Security benefits. Using all these sources of income, you will calculate and enter your adjusted gross income on line 7.
Calculating Your AGI
Once you’ve written down all of your income, it’s time to make any necessary adjustments to that income. These adjustments are called above-the-line deductions. They’re “above the line” because you have to remove them from your total income before you can get your adjusted gross income (AGI). Your AGI is the income figure that the federal government actually uses to determine how much you owe in income tax.
Taking these deductions will require you to attach additional forms to your return. Previously, the 1040 included a 15-line section that took filers through a number of the available above-the-line deductions. Since not all tax filers make adjustments, this section was removed from the 1040 and spread across Schedules 1 through 6. So, for example, if you want to claim an above-the-line deductions for the self-employment tax, you will need to attach two forms. Schedule 4 now allows you to say that you’re claiming the deduction and then you need to attach Form SE to actually claim it.
Note that some deductions that existed in previous years were eliminated with the next tax law. Examples of defunct deductions are those for moving expenses and college tuition and fees.
Once you’ve made necessary adjustments and found your AGI, there are some other taxes and credits to consider. First of all, you need to enter (on Line 8) either your standard deduction or the amount of your itemized deductions. If you have a qualified business income deduction, you will enter that on Line 9. Lines 10 through 15 allow you to enter the amounts of certain credits (if you qualify for them). As just one example, you can enter the amount of your child tax credit on Line 12a.
If you have already had some federal income tax withheld from your income, you can enter that amount on Line 14. You will also need to attach Schedule 4 if you have paid other taxes.
The next section is all about your Refund. If the number on line 18 (your total payments) is greater than the number on line 15 (your total tax) then you have overpaid the government and you are due a refund. Subtract line 15 from line 18 to get the amount by which you overpaid and enter it on line 19. In the rest of the refund section, enter the bank details (account number and routing number) for the checking or savings account in which you want to receive your refund. If you want your refund as a paper check or if you want to use your refund to buy savings bonds, you will need to indicate this on Form 8888.
Amount You Owe
What if line 15 (taxes paid) is less than line 18 (taxes owed)? In that case, you need to pay the IRS some more money. That’s what the final section of the 1040 is for. It’s called, appropriately enough, Amount You Owe. On line 22, subtract line 18 from line 15 to get the amount you owe. On line 23, enter any penalties owed if applicable. You can learn more about underpayment penalties in the instructions of the 1040.
The Form 1040 is the basic form for filing your federal income taxes. No matter what your financial situation, you need to use this form for your 2019 taxes. The form walks you through calculating your AGI and then helps you claim the credits and deductions for which you qualify. The form ends with helping you to calculate your refund (or how much you owe). You can help to simplify the filing process by using a tax software. We did our annual roundup of the best online tax software to help you get started.
It’s also smart to plan ahead through tax planning, which can minimize your tax liability. Many financial advisors offer this service as a part of a comprehensive financial plan. A matching tool like SmartAsset’s can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to three who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.
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