A Basic Introduction on Filing Form 1040

The United States tax system is full of confusing laws and rulings, but it doesn't always have to be something fearful. A basic understanding of how to fill out one form will allow you to recognize what's in store with more complicated forms. At the very least, you'll know where to look for help if you're filling one out yourself, and you'll have the added bonus of a confidence boost in having completed one yourself. Be forewarned though, your first self-completed return may not be up to par with the IRS, so penalties may apply. This article is intended as a basic primer in understanding the more important aspects of filing Form 1040. If you have doubts, or would rather not pay penalty fees, then consult a proper tax authority.

Our journey begins with Form 1040, the individual tax return which everyone must file, excepting those that are dependent on others for support. This simple 2 page document has more details hidden within than you may realize at first. But first, the easy stuff. Fill out your name, address, social security number, etc. at the top of the form. Check your filing status as single, married, etc. For those sections which you may not understand, the IRS refers you to the proper page in the instruction booklet, as for example, head of household. For our purposes, we'll check off Single. This will allow you one exemption claimed, which you will end up inputting on line 6d.

To make the income section simple, line 7 is where you put your total gross salary, which can be found on form W-2, which your employer will furnish for you. The next line, taxable interest includes interest on savings accounts, certificates of deposit, etc. Make sure to add all your bank account interest earnings. Refer to the instruction manual if you have doubts as to what to include. Such investments as bonds are not to be included because they are not taxable. Assuming there was no income for the remaining categories, you will then proceed to add your total income and interest and put that number on line 22.

The next section deals with adjustments for gross income, and includes moving expenses, tuition expenses, and alimony paid, all of which you can deduct from your income computed on line 22. This section gets into more details, and thus we will move on to the next for the purposes of this article. The major parts in the tax and credits section includes the itemized or standard deductions. Itemizing allows you to break down certain expenses such as state and local taxes paid and mortgage interest paid in hopes of maximizing your adjusted gross income deductions, in order to pay less in taxes. Refer to the instruction booklet on how to itemize because this can get pretty tricky. For starters, a single person will usually use the standard deduction, which is listed in a box to the left of the line number. Once that number is found, you will continue down and, assuming your income is below $120,000, follow instructions on line 43. This is the amount of money you will be taxed on, which you will need to figure out by referring to the instruction manual to input on line 44. Generally, anyone making less than $90,000 does not need to worry about the AMT, or alternative minimum tax, so we will skip down to the payments section.

The important part here is the federal income tax withheld, which you can find on form W-2. These are federal taxes you have already paid, and will determine whether you owe more or will get a refund. Disregarding the other categories, line 71 will give you your total amount of taxes you may have overpaid. If you have not overpaid, then line 75 will include the amount you currently owe to the government. Generally speaking, it's better to take a refund than to apply it to your next year's tax return. Complete the form by signing at the appropriate places. Even if you do not owe any taxes or will not receive a refund, you must still turn in a completed form. Hopefully this introduction has made you more aware of the format of form 1040. For further assistance, refer to the instruction manual, which you will want to read regardless due to the ever changing tax laws and withholding amounts.

Source referenced: www.irs.gov/pub/irs-pdf/f1040.pdf