What Is IRS 1040? Your Complete Guide This Tax Season

The IRS 1040 form, or the mother of all tax filing forms, is one of the official documents that US taxpayers are required to use to file their annual tax returns.

The 1040 form is segmented into sections where you categorically input your income and deductions. This will automatically determine the amount of tax you owe or the tax refund you can expect to receive.

Form 1040 is less than two pages long, but you need to attach additional forms (also known as schedules) if you have certain types of income, credits, or deductions.

Before we explore the various types of Form 1040 and the entire filing process, let's look at the new changes made to the form in 2020.

Changes to Form 1040 in 2020

The 2020 Form 1040 has been greatly simplified from years past because of the 2017 tax reform.

The biggest change is that a new Line 30 has been added for the Recovery Rebate Credit. This is for taxpayers who didn't receive payments or could have acquired a larger payment from the government when stimulus checks went out in 2020 during the COVID-19 pandemic.

Types of Form 1040: Choosing the Right Tax Form

For the majority of taxpayers, 1040 is the appropriate tax filing form to use. However, you may require additional forms known as schedules if:

  1. You own a business. Sole proprietors must use Schedule C, whereas S or C corporations should opt for Schedule E.
  2. You are not a resident of the United States. Immigrants that are not resident aliens should file Form 1040-NR.
  3. You are over 65 years of age. You can use Form 1040-SR as it is designed with a larger, easier-to-read print than Form 1040.

Filing Form 1040

If you're wondering how to get the 1040 form, you can download the PDF version and print it out to do your taxes by hand. You can then mail the form to the respective address as stated here.

However, the safest and simplest method to file your taxes is electronically through an online tax filing service. E-filing is safer because you don’t have to worry about data discrepancies or anything getting lost in the mail. The IRS estimates that 21% of paper returns have errors, while less than 1% of e-filed returns have mistakes.

You can file Form 1040 via the IRS portal or an online tax filing software program, which will guide you through the entire filing process.

Prerequisites for Filing Form 1040

Before you file Form 1040 for your income tax return, you first need to gather all of your tax documents, which include:

  • Form W-2, which is used to report wages paid to employees and the taxes withheld from them.
  • Form 1099, which is used to record income you received as an independent contractor or through some other source.

Not sure how to fill out 1040 or need assistance with the process? Find out how Fincent can make tax filing easy for you.

Form 1040 Filing Process

The 1040 tax form is a relatively simple two-page form. The first few sections are for personal and filing information, followed by 38 numbered lines and then a signature section. Here's a step-by-step guide for filling out Form 1040:

Starting Sections

1. Personal Information

This section is where you enter personal details such as your name, address, Social Security number (SSN), and tax filing status. If you have one, you can mention your Individual Taxpayer Identification Number (ITIN) on the SSN line. If you are filing a joint return, you can also include your spouse’s information.

2. Standard Deductions Applicable

Standard deductions entail the expenses you can subtract from your annual income. This section has seven boxes to help determine the amount of your standard deduction. Check the ones that apply to you.

3. Dependents

This section is to add your dependents and has room for each of their SSNs, their relationship to you, and a box you can check if the dependent qualifies you for the child tax credit.

Calculating Your Total Income

Lines 1 through 9 are for calculating your total taxable income. Here, you need to input the amount from each type of income line by line. Lines that are not applicable should be left blank.

Lines 10 to 15 ask for additional information as per any actions taken by you or any situations that are applicable to you.

Calculating Your Annual Tax Bill

Lines 16 through 24 help you calculate your total tax, i.e., the amount you owe in taxes before factoring in certain tax credits. Lines 25 to 33 ask for additional information.

Calculating Your Tax Refund or Bill

The next five lines are where you calculate the total amount of your refund or tax bill. You will get a refund if line 33 (total tax paid) is more than line 24 (total tax owed).

On line 35, you will input the direct deposit of your refund. Here, you should mention:

  • The bank account number
  • The bank routing number
  • The type of account (checking or saving)

Understanding the Various Schedules

Lettered Schedules

The lettered 1040 schedules you may need to file as a small business owner or self-employed person are:

Numbered Schedules

There are three numbered schedules associated with Form 1040:

You’ll attach each schedule with Form 1040 and send them to the IRS. You should file Form 1040 and other tax forms within the tax deadline itself.

The deadline for filing Form 1040 for your tax returns has been extended to May 17, 2021. The quarterly estimated tax payments are still due on April 15, 2021.

Making Corrections After Submitting Form 1040

If you notice any mistakes on the form after you've already submitted it, you can amend your return by filing Form 1040X. It's a quick process where you only update the boxes that will change on the corrected form.

Once Form 1040X has been dispatched, you can check the status of your amended return here.

What's Fincent?

Fincent is a professional, dedicated and affordable bookkeeping service for creative small business owners in the United States.

Try Fincent today with a 1-month free trial to save time and money on managing your books so that you can do more of what you love.