Instructions for Filing Form 1040

Form 1040

Last Updated September 7, 2022

Being a responsible citizen means you earn the hard way, pay the taxes, and also get facilitated by the government. Like any other US resident, you will submit the W2-Form on time in order to file for tax returns. It’s an official document that must be filled by the taxpayer for the annual income tax returns. 

Form 1040 is divided into sections; to report your income, mention the deductions from your income and the refund you expect to receive. According to the type of income you earn, it may be necessary to attach other forms/schedules too. 

A brief intro to Form 1040

The IRS refers to Form 1040 in its entirety as “Form 1040: U.S. Individual Income Tax Return.” All tax filers must utilize the same form of the Form 1040 as of 2019, as there is only one. Before, uncomplicated tax circumstances may be filed using the 1040EZ or 1040A. However, due to the tax package that President Trump signed into law in late 2017, these forms are no longer in use. Form 1040NR, which nonresident aliens use, is the lone exception.

With the help of Form 1040, individuals can file for a federal income tax return with the IRS. The form reports your gross income of the prior year and the deduced amount you are receivable for after paying tax credits and other deductions. 

If you are an independent contractor or works as a freelancer, then this form can also handle multiple sources of income. Certain complicated tax situations are recorded in this form to resolve the issue you may face as a contractor or freelancer. 

The date of submission, for Form 1040, is April 15, 2021. In case if you need more time, you can request an extension as well. 

Step by step guideline to understanding Form 1040 

Before filing Form 1040, you need to attach, all or any, W2-Forms as well. After the submission of W2-Form only then you can enter the required information for Form 1040 like interest, dividends, pensions, annuities, and so on. 

Before 2019, two forms were being used instead of one – Form 1040EZ and 1040A. However, neither of these exists anymore. The standard version in current use is Form 1040. But if a tax payer’s age is 55 or above, they need to fill the new form 1040-SR. 

Eligibility Criteria 

Those with net earnings of at least $400 (self-employed) are bound to file a tax return. So most independent contractors and freelancers also have to file Form 1040 even if gross income is not as per mark. For instance; 

  • The filing status: single 
  • Age at end of 2019: under 65 (both spouses),65 or older
  • Gross income: $12,200 ($24,400), $13,850

Get the Form 1040 

You can download the form to fill manually but the best way is to use the tax software programs, PDF versions are available on both. But if you solve it with the software, it will guide you to fill the form step by step with any necessary schedules or required attachments. The form is divided into sections so that you can 

  • Report your income 
  • Deductions
  • Refund 

Form 1040 for the year 2019 includes 2 pages to fill out. It can either be mailed or e-filed. 

Report Your Income

The next stage involves a fair amount of math. Your income is the only subject of lines 1 through 7. You must enter the earnings details from your W-2 here if you have one. Additionally, you must provide any and all W-2 forms you may have.

The first page consists of the calculated Adjusted Gross Income (AGI) AND Taxable Income. 

Enter all sources of income (wages, salary, tips, interests, dividends, taxable state and local tax refunds, taxable alimony, capital gains, business income, IRA, pension distributions, farm income, unemployment income, and Social Security benefits. 

In the case of “other income” you need to complete Schedule 1 to report like; 

  • Alimony 
  • Business income (complete Schedule C)
  • Gain or loss from sales of business property 
  • Rental real estate, partnership income, C Corporation or trust 
  • Unemployment income 
  • Farm income 

The sum of all incomes will be your total income which is why you need to mention all sources. 

Deductions claim 

IRS allows the filer to claim specific deductions from the total income. These are divided into two categories;

  • Above-the-line deductions

The amount of income that the federal government really considers when calculating your tax liability is your AGI. The adjustment to income is the adjusted gross income (AGI). The adjustment to income is the adjusted gross income (AGI). Your AGI reduces once these deductions are made. They include; 

  • Contributions to health saving accounts
  • Educator expenses 
  • The deductible portion of self-employment taxes 
  • Health insurance premium (self-employed)
  • Student loan interest 
  • Alimony paid 

In case, you qualify for the above-mentioned deductions you will require to complete Schedule 1.

  • Standard Deductions 

You have the option to itemize the deduction when filing Form 1040. Another way is to claim the standard deduction and complete Schedule A. this is mentioned on the second page. 

In case, the itemized deductions are higher than standard deductions, you must opt to itemize. They include;

  • Gifts to charity 
  • Casualty/theft loss 
  • Medical and dental expense
  • State and local income
  • Property taxes 
  • Home mortgage interest 

Tax liability 

The second page also consists of the section on Tax liability. Consult the IRS instructions to determine your tax using tax tables, if you plan to return the form by hand. You will need to complete the Schedule for other taxes too. They include; 

  • Self-employment tax 
  • Alternative minimum tax 
  • Early distributions from IRAs/other tax-favored accounts (additional taxes)
  • Household employment tax 

Some of the taxes included directly on Form 1040 includes;

  • Child tax credit 
  • Earned income credit
  • Additional child tax credit 

Schedule 3 is to be completed in case of other tax credits like; 

  • Residential energy credits
  • Retirement savings contributions credit 
  • Education credits 
  • Credit for child 
  • Dependent care expenses 
  • Foreign tax credit 
Check on Your Refund

Your refund is covered in the section that follows. You have overpaid the government and are entitled to a return if the amount on Line 19 (your total payments) exceeds the amount on Line 16 (your total tax). To determine how much you overpaid, subtract Line 16 from Line 19 and enter the result on Line 20.

Enter the bank information (account number and routing number) for the checking or savings account where you want to receive your refund in the remaining refund section. You must specify on Form 8888 if you want your return as a paper check or if you wish to buy savings bonds with it.

Calculate The Amount You Owe

You must pay the IRS extra money if Line 19 (taxes paid) is lower than Line 16 (taxes owed). The last portion of Form 1040 is intended for that purpose. Its name, “Amount You Owe,” is quite fitting.

To determine how much you owe, divide Line 19 by Line 16 on Line 23. Any fines due, if any, should be entered on Line 24.

Once the form is signed you can file Form 1040 via email or through the mail, the choice is yours. 

Where to Mail?

In case you want to file the paper return, the address will vary according to the state you live in. you can learn further information about it from IRS instructions for Form 1040

In case you want to submit through an e-file (the preferred way), you can do so by using IRS Free File if the AGI is $66,000 or less. E-file submission is easier, convenient, and more secure than paper filling hence the preference. 

Additional Tax Forms You May Require 

In case if you are not the sole properties, you will need to file the following; 

  • Form 1065 for PARTNERSHIPS AND MULTI-MEMBER LLCs to report the income and expenses of the partnership. You will require to fill Schedule K-1 to complete Form 1040. 
  • Form 112OS for the income and expenses of the corporation. The taxable income of the corporation is reported on Schedule K-1. 
  • Form 1120 for C corporations to report the business income and related deductions. You also need to report your business income tax return.

Tips on How to Manage Your Taxes

Planning for your taxes is a crucial component of any comprehensive financial strategy. In fact, financial planners frequently provide their clients with this service. The free service from SmartAsset connects you with up to three local financial advisors, and you can interview your advisor matches for free to choose which one is best for you. Start your search for a financial advisor right away if you’re prepared to do so.

Check again how any changes to your income will impact your federal tax return as they occur. Visit the federal income tax calculator on SmartAsset to estimate your refund or tax obligation.

The mistake on Form 1040  

In case of any mistakes made on the form, you can make amendments to Form 1040X. You have an extension of 3 years from the date of filing your federal tax return to make the required correction.