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What are the IRS 1040 & 1040A Forms?

posted Jan 15, 2018, 6:09 AM by Nhat Vuong Tran

What Is an IRS 1040 Form?

Updated for Tax Year 2017


OVERVIEW

One of the official documents that U.S. taxpayers can use to file their annual income tax return is the IRS 1040 form.


 The IRS Form 1040 is one of the official documents that U.S. taxpayers can use to file their annual income tax return. The form is divided into sections where you can report your income and deductions to determine the amount of tax you owe or the refund you can expect to receive. Depending on the type of income you report, it may be necessary to attach other forms or schedules to it.

Reporting your income

The first page of Form 1040 is where you calculate your Adjusted Gross Income (AGI). The first section requires you to enter information on all sources of income such as your wages and salary, tips, interest, dividends, taxable state and local tax refunds, alimony, business income, capital gains, IRA and pension distributions, farm income, unemployment income and Social Security benefits.

You will always find a box on the form to list “other income” you receive that doesn’t fit into one of the other categories. You must report all income you receive, regardless of where it comes from, unless it’s tax-exempt. The sum of all of these income items is known as your total income.

Deductions for AGI

From your total income, the IRS allows you to claim specific deductions or adjustments to arrive at your AGI. Allowable adjustments include one-half of your self-employment tax payments, alimony payments you make, IRA contributions, payments of student loan interest and health savings plan contributions, to name just a few. Your AGI is an important number since many deduction limitations are affected by it.

Deductions and exemptions

The second page of Form 1040 begins with your AGI and allows you to reduce it further with either the standard deduction or the total of your itemized deductions. Itemized deductions include expenses such as mortgage interest, unreimbursed business expenses and excess medical expenses as well as many others.

If the total of your itemized deductions does not exceed the standard deduction for your filing status, then your taxable income will be lower if you claim the standard deduction. After choosing the best deduction, you can then reduce your taxable income even more by one exemption for yourself, and one for each of the dependents you claim. After subtracting your exemptions, you are left with your taxable income, which is the amount subject to income tax.

When you use TurboTax, we’ll do this for you and recommend whether choosing the standard deduction or itemizing will give you the best results.

Calculating the tax and claiming credits

You must now figure out the amount of tax you owe on your taxable income by referencing the tax tables in your instructions. However, if you use software, such as TurboTax, to prepare your return, the tax will be automatically calculated for you. Comparing your total tax withholding to your tax bill at the bottom of Form 1040 will tell you whether you must make an additional payment or if you should expect a refund. If you are eligible for any of the tax credits listed on the form, make sure you reduce the amount of tax you owe by each credit before completing your Form 1040.


What Is the IRS 1040A Form?

Updated for Tax Year 2017


OVERVIEW

One of the three forms you can use to file your federal income tax return is IRS Form 1040A.


The IRS Form 1040A is one of three forms you can use to file your federal income tax return. Form 1040A is a shorter version of the more detailed Form 1040, but is more complex than the simple 1040EZ form. All taxpayers can use Form 1040; however, to use Form 1040A you must satisfy a number of requirements, such as having taxable income of $100,000 or less and claiming the standard deduction rather than itemizing.

Filing status and exemptions

When preparing Form 1040A, you must list your exemptions and choose your filing status and exemptions before you begin to report any income. Each filing status, such as “single” or “married filing jointly,” uses different tax brackets for calculating your income tax.

However, your filing status doesn’t affect the exemption amount you claim for yourself and each of your dependents. Each exemption works just like a deduction; the amount reduces your taxable income, so the more exemptions you have, the lower your tax liability will be. The top portion of the form includes a section where you must list the name and Social Security number of each dependent and provide their relationship to you.

Types of income allowed on the 1040A

The income section of the 1040A form only allows you to report limited types of income. Specific items include wages, salaries and tips, interest and dividend income, capital gains, IRA, pension and annuity distributions, unemployment compensation, Alaska permanent fund dividends and Social Security benefits. If you have other types of income, such as from a business you operate as a sole proprietorship, you still must report the income since it is taxable, but you must file the full-length Form 1040.

After reporting your income, the 1040A form allows you to claim certain adjustments to arrive at your adjusted gross income. These include deductions for educator expenses, IRA contributions, student loan interest and tuition payments.

Reporting tax, credits and payments on Form 1040A

The second page of Form 1040A allows you to subtract a standard deduction and your exemption allowances from your adjusted gross income to arrive at your taxable income. You then need to determine the amount of tax you owe by finding the appropriate range for your taxable income and filing status in the tax tables in the instructions.

Once you calculate your tax, Form 1040A allows you to claim a limited number of tax credits such as for child and dependent care expenses, the credit for the elderly or disabled and education tax credits. Your total credits reduce your tax bill on a dollar-for-dollar basis. After reducing your tax by the credits, you reduce it again by the amount of your tax payments and withholding.

Differences between Form 1040A and Form 1040

The filing status and exemptions section of Form 1040A is similar to the corresponding section on Form 1040. Due to the limited types of income you can receive and the limited adjustments to income you can make on Form 1040A, the income and adjusted gross income sections of Form 1040A are much shorter. One of the most significant differences between the two forms is that you can itemize deductions on Form 1040 but not on Form 1040A.

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