If you are a US-based business owner, an independent contractor, or self-employed, you should know how to file a federal income tax return using the IRS Form 1040. The guide below will explain the Form 1040 meaning and how to fill out a 1040 tax form step by step to ease your tax routine.
What Is Form 1040: U.S. Individual Tax Return?
A standard IRS form 1040 is used by individual taxpayers to file their yearly income tax returns. It serves to determine whether extra taxes are owed or a filer will get a tax refund. The document requires personal data, such as name, address, SSN, and the number of dependents. With it, you can report salary, wages, Social Security benefits, taxable interest, pensions, capital gains, etc.
Form 1040 US Individual Income Tax Return has several variations, and it has been recently modified. Depending on the type of the reported income, you may be required to add other forms to it, known as schedules. Owners of small businesses may find this task a bit daunting so they may rely on small business tax preparation services.
Who Needs to File Form 1040?
US citizens need to file Form 1040 regardless of being self-employed, working for another employer, or getting income from investments. You must submit this form to the IRS in case you fall under one of the categories below:
- Owe AMT (Alternative Minimum Tax);
- Have tips you didn’t report to your employer;
- Owe household employment taxes;
- Qualify for the premium tax credit;
- Are currently repaying your first homebuyer credit;
- Have a foreign account;
- Got distributions from a foreign trust;
- Are eligible for the external earned income exclusion;
- Had no Social Security and Medicare taxes withheld from your pay by your employer, etc.
How to Fill Out a 1040 Form?
For a smooth filing procedure, collect all tax documents related to your income and deductions. If you are the one who files a 1040 form, follow these steps:
- On page 1, write down your name (and your spouse’s, if you are married filing jointly), SSN, address, and data on your dependents.
- Report all sources of income you got for the tax year. For extra income sources, you have to fill out Schedule 1.
- Claim your deductions to show whether your total taxable income is reduced. Above-the-line deductions (or adjustments to income) lessen your AGI (adjusted gross income), and there’s no need to itemize to claim them. Complete Schedule 1 if you qualify for any above-the-line deductions.
- In case your total itemized deductions exceed the standard figures for your filing status, you have to itemize by filling out Schedule A.
- If you are a business owner, you may claim the qualified business income deduction. Your total income without deductions equals your taxable income. Some other taxes will also require you to fill out Schedule 2.
- On page 2, calculate your tax liability, claim tax credits, and list the already made tax payments for the year. Complete Schedule 3 if you have other tax credits.
- Sign the form and file it by mail or electronically.
Types of Form 1040: U.S. Individual Tax Return
Except for the standard version, there are other variants of a 1040 Form a taxpayer may require in different situations.
- Form 1040-NR — nonresident aliens and their representatives have to file this form if they run a business or are engaged in trade in the US. Representatives of a deceased person, an estate, or a trust may also submit Form 1040-NR;
- Form 1040-ES is used for calculating and paying estimated quarterly taxes;
- Form 1040-V accompanies a taxpayer’s payment noted in the “Amount you owe” lines of forms 1040 or 1040-NR;
- Form 1040-X is used to correct mistakes and include additional data in the previously filed 1040 form;
- Form 1040-SR is a new document created for seniors in 2019. It features a larger font, no shading, and an additional standard deduction for seniors in the specialized chart.
How to File a 1040 Form?
The deadline to submit Form 1040 is April 18, 2022. This document should be sent to the IRS. You may request an extension to get extra time to complete the form. The address to which you have to send your paper return depends on the state where you live. It is noted in the IRS instructions for Form 1040.
However, e-filing is considered more convenient. This option is recommended by the IRS since it’s easier and safer than paper filing. It enables you to receive your tax refund faster.
No Stress, No Taxes in a Mess
Though the form is rather complex, by following the detailed guide above, you can calculate your taxable earnings and tax on that income stress-free. Besides, if you made a mistake in the form, you can make a correction in Form 1040-X. Leave your comments below if you have any questions after reading this guide.
Based on article by pdfliner.com