The Form 1040 is one of the tax forms that US taxpayers can use to file their federal taxes. This form has numerous sections, which allows you to report your income, take deductions and credits, and determine the amount of money you will receive in the form of a refund.
Depending on the type of income, that you received throughout the year you may have to attach additional forms to form 1040 too.
How to Report Your Income on Form 1040
The first page of the 1040 form is where you will calculate your AGI. You will have to enter various information about all of your income sources. You will also find a box that is for “other income”, which is where you will report all of the income that does not fit into the other categories.
Keep in mind that you are responsible for reporting all income, regardless of who gave it to you, unless it is considered tax-exempt income. All of the income items are what make up your total income.
Once your total income has been calculated, you will be able to claim specific deductions/adjustments to reach your AGI. For example, some acceptable adjustments could include half of the self-employment tax payments that you paid. IRA contributions and student loan interest. Your AGI is very important because many deduction limitations are affected by it.
Exemptions & Deductions
The second page of this form starts with your AGI, which can now be lowered even more with the standard deduction or itemized deductions. If you decide to itemize your deductions, you would be including things such as unreimbursed business expenses, mortgage interest, and other similar things.
Keep in mind if your itemized deductions are not more than the standard deduction, it is ideal to just skip itemizing your deductions and take the standard deduction. Once you have selected the best deduction for your tax situation you will want to reduce your taxable income even more by taking an exemption for yourself and any dependents that you can claim. Once done, you will have your taxable income, which is the amount of money that you will pay taxes on.
We recommend filing with H&R Block online so they can decide which deduction will allow you to receive the best benefits.
Tax Calculations & Credits
The next step in the process is for you to determine how much tax you owe on your taxable income by referencing the tax tables. When you use H&R Block, you can skip going through the headache because they will automatically calculate everything for you.
When you compare your total tax withholdings to your tax bill at the bottom of the form, you will be informed as to whether you need to make a payment to the IRS or if they will be giving you a refund. Additionally, if you are entitled to any tax credits, make sure you claim them, so you can reduce the amount that you owe even more.
You can use the H&R Block tax refund calculator to see how much you’ll get back this year in your tax refund.