What To Know About IRS Form 1040

Form 1040, which is officially titled “Form 1040, U.S. Individual Income Tax Return,” is an IRS form used by individuals to file their annual federal income tax returns. It’s a detailed two-page document with a myriad of supporting forms and schedules.

Most individuals are required to file Form 1040 on an annual basis, but there are some exceptions. Whether you file your own taxes or enlist the assistance of a tax professional, it’s important to understand the use of Form 1040.

The IRS requires individuals with gross income of certain levels to file a Form 1040. As illustrated below, the income threshold varies based on filing status and age.

*Exceptions apply. Refer to the IRS instructions to determine whether the exceptions apply to you.

Children and other dependents may not be required to file a Form 1040 if they can be claimed on the tax return of another individual. However, the dependent’s unearned income, earned income and gross income must fall below certain thresholds. The thresholds vary based on the dependent’s age, marriage status and whether they are blind.

At a high level, Form 1040 contains sections that capture the following information.

Tax deductions are provisions that indirectly reduce your tax obligation by reducing taxable income. Tax credits, on the other hand, are provisions that directly reduce the amount of tax you owe. As a result, credits are usually more economically beneficial than deductions.

Ultimately, your inputs are used to determine your taxable income and the associated total tax. Then, after accounting for any tax withheld from your earnings and any payments made, you can compute your outstanding tax obligation or refundable amount.

While this is a simplistic recap, filling out Form 1040 can be complex. This is especially true for individuals with personal finances that involve multiple streams of income and the ability to claim a variety of deductions or credits. If you intend to prepare your own taxes, be sure to methodically reference the 2022 Instructions for Form 1040 along the way.

In 2023, you have until April 18 to file Form 1040. You can do so manually with a pen and printed form, but most taxpayers elect to file electronically.

The IRS Free File program, available only through the IRS website, offers eligible taxpayers brand name tax preparation software packages for free. Some of the packages can also be used to file your state return for free. The software does all the work for you; you just have to answer a series of questions and input pertinent information when prompted.

If you’re comfortable preparing your own taxes, you can use the IRS’ Free File Fillable Forms, regardless of your income. No guidance is provided, and the calculations are limited. Nevertheless, this approach is more efficient than the pen and paper method, and it enables you to submit your return via mail or electronically.

If you pay a tax professional to do your taxes, they will take care of everything and utilize whatever software is deemed appropriate. Then, at the end of the process, you will receive a paper or electronic copy of your entire tax return, inclusive of any supplemental schedules required.

Supplemental schedules don’t apply to everyone, but they are widely utilized. Generally, as the complexity of your finances increase, so will the number of supplement schedules you are required to file. The most common schedules, all of which feed Form 1040, are listed below.

Schedule 1 is used to report additional income or adjustments to income. This includes things like alimony income, business income, rental income, health savings account (HSA) contributions and unemployment compensation.

Schedule 2 is used to report additional taxes. It is used when you owe alternative minimum tax, repayment of excess advance premium tax credits, self-employment taxes, additional tax on tax-advantaged retirement accounts, additional Medicare tax or household employment taxes.

Schedule 3 is used to report additional tax credits and payments. Commonly claimed credits include the foreign tax credit, dependent care expense credit, retirement savings contributions credit and various residential energy credits and educational credits.

Several other common supplemental schedules are summarized below.

Form 1040, U.S. Individual Income Tax Return, is the standard form that most taxpayers use each year. However, as outlined below, there are a few other 1040 forms that may apply to you.

Form 1040-ES is used to help self-employed individuals and those who earn significant amounts of money from non-employment sources, such as investments in real estate and financial securities, to calculate their estimated quarterly taxes.

Form 1040-NR is designed for nonresident aliens engaged in business or trade within the U.S., representatives of deceased persons who would have been obligated to file the form and representatives of estates and trusts required to file the form.

Form 1040-SR is relatively new. It’s for people aged 65 and older. It uses the same schedules and instructions as Form 1040 but presents things in an easier to read format. It also has an embedded standard deduction table to make it easier for older taxpayers that do not itemize their deductions to claim the appropriate standard deduction.

Form 1040-V is a payment voucher you send with your check or money order for any balance reported on the “amount you owe” line of your Form 1040 or 1040-NR. If you make your payment electronically, this form is not required.

Form 1040-X is used when you need to file an amended tax return. It is used to correct errors made on your initial filing, make certain elections after the deadline and make a claim for a carryback due to a loss of or unused credit.