The IRS 1040 Form is used by the taxpayers in the United States for filing the income tax return. This form comes divided into various sections for the taxpayer to report their income as well as deductions for determining the net amount of income tax that they require paying or they are eligible to receive as a refund. Depending on the sources of your income, you will require attaching various supporting documents and schedules with this IRS form. Here is the 1040 form guide for you.
How to report your gross income?
The first page of the aforesaid form deals with the computation of the Adjusted Gross Income. In the first section, you have to provide information on the sources of your income. The form has got a field, wherein you will require providing the computation of the income from those sources that are not mentioned in the form. Unless the income qualifies for tax exemption, you will require mentioning all the details of your income.
Computation of AGI
The IRS allows the taxpayers to claim some specific deductions from their total income for arriving at their respective AGI. This includes 50% of the tax payments for self-employment as well as alimony payments if any. In addition, the deductions include the repayment towards Student Loan Interest and Contributions towards Savings & Health schemes. The AGI is a crucial number as it affects various deductions.
Exemptions and Deductions
On the second page of the form, there is the option to include the exemptions, you qualify through itemized deductions. Some of the categories in this regard are, mortgage interest, excess medical expenses over the limit of health scheme, Business Expenses Unreimbursed and others.
How to compute the tax and claim credits?
You will require calculating the net tax amount you owe for your taxable income by giving reference to the tax table in the instruction. Alternatively, you can use software that will automatically to this computation for you.
Comparing the amount of total withheld tax to the Tax bill, you can find if you require making an additional payment or you are qualifying for claiming a refund for excess tax, already paid. If you qualify to claim any credits, you will require reducing the tax amount that you owe, prior to completing the Form.
This excerpt is likely to assist you to complete the formalities for the submission of IRS return. Alternatively, you can avail the services of the professional Tax consultants.