Tax and Finance

What is IRS Form 1040

Editor’s note: In case your tax deadline is April 15, that the U.S. Treasury has announced that a 90-day expansion on your taxes — you now have until July 15 to file and pay your taxes. This guide will be updated with relevant tax changes.

If you are submitting income taxation as an independent contractor or freelancer in the USA, it is time to get closely acquainted with Form 1040. Who must file? How can you record it? Here is what you want to know.

What’s Form 1040?

Form 1040 is the way people file a federal income tax return with the IRS. It is used to report your gross income — the more money you made within the previous year and just how much of the income is taxable following tax deductions and credits. It calculates the total amount of tax you owe or the refund you get.

This form may manage many sources of revenue and much more complex tax situations an independent contractor or freelancer may confront.

If you are a sole proprietor, then you are going to comprise Program C with your Form 1040 to report income or loss from your company.

Who should file Form 1040?

Many folks in the U.S. should file Form 1040, if they’re independent contractors, contractors, work for somebody else as a worker, or live off financial gain from investments. Generally, you must file a Form 1040 if:

Filling StatusAge by the end of 2019Gross income at least…
SingleUnder 65$12,200
65 or older$13,850
Married filing jointly Under 65 (both spouses)$24,400
65 or older (one spouse)$25,700
65 or older (both spouses)$27,000
Married filing separatelyAny age$5
Head of householdUnder 65$18,350
65 or older$20,000
Qualifying widow(er)Under 65$24,400
65 or older$25,700

But when you’ve got net earnings of $400 out of self-employment, you have to submit a tax return. That means most independent contractors and contractors must file Form 1040, even if they don’t match the gross earnings thresholds shown previously.

For more information on who wants to document, Take a Look at Chart A, B, and C at the Instructions for Form 1040.

Why do we need 1040EZ and 1040A forms?

Earlier 2019, there have been briefer variations of Form 1040 for filers with simpler returns. All these were Form 1040EZ and 1040A, however they no longer exist.

The IRS currently requires citizens to utilize Form 1040. But beginning with all the 2019 tax season, taxpayers age 65 and upwards might have the ability to record using the newest Form 1040-SR.

How to Find Form 1040

The IRS provides a PDF edition of form 1040 which you could download and fill out, but your very best option is most likely using one of the favorite tax software applications.

The computer software will help you through completing the form, any mandatory schedules that go with it, and also help with the mathematics.

Whichever method you select, the form is broken up into segments where you could report your earnings and deductions to find out the total amount of tax you owe or the compensation you will receive.

How to Complete Form 1040

To begin completing Form 1040, you will first have to assemble all your tax records, such as W-2s, 1099s, and other documents of your earnings and deductions.

As Soon as You have your tax aid hand, You’ve Got three Chief choices for filling out and submitting Form 1040:

  • Fill it out using PDFliner;
  • Fill it yourself with commercial tax software;
  • Find a paid tax preparer to do it for you.

If you’ve decided to do this yourself, keep reading.

Report your income

On the very first page of Form 1040, you are going to supply your (and your spouse, if married) title, Social Security number, address, and data on your own inheritance.

Form 1040 first part example

Then you will proceed to record all sources of income that you received for the year. Lines for several common kinds of income, like salary, interest and wages, retirement income, and capital gains are supplied.

If you’ve any extra income resources, you will also have to complete Schedule 1 to report:

  • Alimony;
  • Business income (in which case you will also have to complete Schedule C);
  • Farm income;
  • Unemployment compensation;
  • Profits or losses from sales of business property;
  • Rental real estate, royalties, or income from a partnership, C corporation or trust (in which case you will also have to complete Schedule E).

The amount of income sources is the overall income.

Claim your deductions

Deductions in the overall income decrease your taxable income. Deductions in your Form 1040 fall into two broad classes:

1. Above-the-line deductions

Above-the-line deductions (also called adjustments to earnings ) get their name because they look over the lineup for adjusted gross income (AGI) on Form 1040. These deductions reduce your AGI, and also you do not need to itemize to claim them.

They include:

  • Educator expenditures.
  • Contributions to health savings account.
  • The allowable Part of self-employment taxation.
  • Contributions to self-improvement retirement plans and IRAs.
  • Self-employed Medical Insurance premiums.
  • Alimony paid.

Should you are eligible for any above-the-line deductions, then you will want to complete Schedule 1.

2. Itemized deductions or the standard deduction

If you file Form 1040, you have the choice of itemizing deductions or claiming the standard deduction by finishing Program A. Usually, if your total itemized deductions are larger than the standard deduction available to your filing status, you are going to choose to itemize.

Itemized deductions include:

  • Medical and dental expenditures
  • State and local income and property taxation
  • Home mortgage interest
  • Gifts to charity
  • Casualty and theft losses

If you have a company, you could also profit in the qualified company income deduction. Your earnings, less all available obligations, reevaluate your taxable income.

Calculate your Taxation liability

On the next page of Form 1040, you’re compute your tax obligation. If you are organizing your return, you will want to consult with the IRS Instructions for Form 1040 to ascertain your tax using the tax tables.

There are a number of different taxes which will ask that you also complete Schedule 2.

These include:

  • The alternative minimum tax.
  • Self-employment tax.
  • Household employment taxes.
  • Added taxes on early distributions from IRAs and other tax-favored balances.

Page two can also be where you maintain tax credits and record the tax obligations you have already made for your year. Some tax credits, like the Child Tax Credit, the Earned Income Credit, and the additional child tax credit, go directly on Form 1040.

Where to Send Form 1040

If you would like to submit a paper return, then the address to which you will send your return is contingent upon the condition where you reside.

But if you are capable, e-filing is your favorite means to file IRS Form 1040. The IRS urges that eligible taxpayers file their returns because it is simpler, more convenient, and more secure than paper filing. In addition, it can help you to get your tax refund faster.

It is possible to e-file your yield with IRS Free File if your adjusted gross income is $66,000 or even less. Otherwise, most tax preparation software and tax specialists are approved to file Form 1040.

What is the Form filing deadline

You will want to submit Form 1040 to the IRS by April 15, 2020 (currently July 15, 2020). Should you want more time, then you can ask an extension.

Other tax forms You Might Need

Above, we have listed a couple of common forms and schedules you might have to attach to Form 1040, however you will find several more you might have to finish. Review the IRS Instructions for Form 1040 for any other types you want.

Furthermore, if you are not a sole proprietor, you might be required to file another tax return for the business enterprise.

  • Partnerships and multi-member LLCs document Form 1065 to report the expenses and income of the venture.
  • S companies document Form 1120S to report the expenses and income of this corporation. Your share of the company’s gross income will be recorded on Schedule K-1 of Form 1120S, and you will require that K-1 to complete your Form 1040.
  • C company pays its tax with Form 1120. So while you will still must file your Form 1040 individual income tax return, you won’t have to report your business income , only your own personal income.

In case you make an error on Form 1040

If you made an error in your 1040 and will need to generate a change, you certainly can do this on Form 1040X. You’ve got three years from the date you file your federal tax return to create a correction.


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