What is a 1040 form?
It is very important for a person residing in the USA to file their annual income tax returns as per IRS guidelines. Form 1040 is an important form for individual taxpayers while filing income tax returns. This form is an official document to be submitted by U.S. taxpayers. There are different sections in this form where you can mention the standard deduction and income. It helps to understand the refund being received and the amount of tax owed. An individual may also have to attach additional forms called schedules as per the type of income gained. There are various types of schedules in Form 1040 as per the criteria satisfied.
What is the main purpose of IRS Form 1040?
A proper calculation of the tax on the taxable income is mentioned in IRS Form 1040 by the taxpayers. A calculation of the Adjusted Gross Income (AGI) must be done initially. After this, the necessary allowable adjustments are done which is also called above-the-line-deductions. More deductions can be done with either itemized deductions as per Schedule A or the standard deduction. Expenses included in the itemized deductions are sales tax, state & local income taxes, mortgage interest, contributions made for the charity, excessive medical expenses, etc. From 2018, the exemption deductions are being replaced with different dependent tax credits and child tax credits.
There are two pages in Form 1040 without counting the attachments. The first page in particular collects the information about the dependents and the taxpayers. On this page, the filing status is specified by the taxpayers. The second page calculates the standard deductions allowable, income reporting, taxable income applicable after adjusted income, etc. On the right side of the first page, the fund check off of the presidential election campaign is there and this is received to a Presidential election campaign fund.
Who needs to file form 1040?
The losses or income made in only specific types must be filed in a 1040 form. Some of these include:
- Income received as shareholders in an S corporation, a partner in a partnership firm, trust, or estate beneficiary.
- Getting an income of $400 or more through self-employment.
- Dividends on the income tax policy than the premiums paid.
- Interest paid or received on the securities on certain terms.
- Had a qualified Health Savings Account from an IRA.
Apart from these, there are other aspects where you need to file form 1040.
How to fill Form 1040?
Form 1040 is offered by the IRS which can be downloaded and filled manually. However, now popular tax software is used for filling this form. This software can help you to fill out the form with proper guidance. You can choose either of the ways, the structure of the form will be common here. While filling out the form, it is important to gather proper tax documents like 1099s, W-2s, and other records of deductions and income.
You will have three options to fill out this form:
– Doing it yourself with the tax software.
– Doing it yourself with an IRS-free file.
– Outsource this work to a paid tax preparer
If you have proper experience and knowledge about it then you can choose either of the first two options. However, if you have lesser knowledge or want to relieve yourself from this extra task then outsourcing it to an expert tax preparer can be better. Here, tax professionals will have the expertise to fill out the Form properly. They can calculate appropriate taxes on the taxable income in a standard way. You can get an expert solution for tax preparation.
Meru Accounting provides the service of filling out Form 1040 while filing income tax returns. Meru Accounting Agency provides different accounting services across the world.
