The regular form used by taxpayers in the U.S. for filing individual federal income tax returns is called Form 1040. Unlike the other tax forms, Form 1040 allows you to claim various expenses, tax credits, itemize deductions and adjust income. Taxpayers saw a big tax reform a couple of years ago. One of them was the new 1040 tax form, if you’re filing income tax as an independent contractor or freelancer. Popular 1040-EZ and 1040A short forms were eliminated by the IRS, requiring everyone to use the revised Form 1040. The renewed 1040s offered a primary return page that was crisp and packed with information, but the numerous schedules and attachments were difficult to follow for many.
Then a new option was brought in for a key group of taxpayers. Seniors 65 or older will get to file on a brand new tax form, Form 1040-SR, which rather resembles the old short-form returns
Below, we’ll look at who should file the form, how to file it and the requirements for using it.
What is Form 1040
The tax form used by individual taxpayers was first introduced in 1913. Its basic setup has remained mostly the same over the century. Initially, Form 1040 was to be filled with information about your income, credits, and deductions. Convenient. However, over the years, dozens of supplementary forms and schedules have been added by the IRS that need additional calculations.
Form 1040 is used to report your gross income—the money you made over the past year—and ascertain how much of that income is taxable after tax credits and deductions. It calculates the amount of tax owed by you or to be refunded to you.
Form 1040 can handle various sources of income and complicated tax situations that an independent contractor or freelancer might have.
If you’re a sole proprietor, you are to include Schedule C with this Form to report income or loss from your business.
Who is to file Form 1040
Most people in the U.S. need to file Form 1040, whether they are freelancers, independent contractors, work for someone else as an employee, or live off the income from investments.
You must file this Form if any of the following applies to your tax condition:
- Total taxable income is $100,000 or over
- Have self-employment income of $400 or over
- You want to itemize deductions (e.g., interest, mortgage, or charity)
- Looking to claim income adjustments (for tuition, educator expenses, health savings accounts, or moving expenses)
- You withheld income tax from paychecks
- Made quarterly estimated tax payments or have over-payment applying to the current tax year
- Earn income from a business, partnership, S-corporation, rental, trust, or farm
- Earn wages from abroad, paid foreign taxes, or are claiming tax treaty advantages
- Sold property, mutual funds, stocks, or bonds
- Received an advance fee for Earned Income Tax Credit (EITC) from an employer
- Have a W-2 showing uncollected taxes (from tips or group term life insurance), or one showing a code Z (income from a 409A non-qualified deferred compensation plan)
- Excise tax is owed by you on insider stock compensation (from an expatriated corporation)
- You are a debtor in a case concerning Chapter 11 bankruptcy (filed after October 16, 2005)
- You owe some other special taxes (e.g., household employment tax, alternative minimum tax, recapture taxes, etc.)
In general, you must file Form 1040 for 2019 if:
|You are:||By the end of 2019, you were:||With Gross income at least:|
|Single||Below 65 65 or above|| $12,200|
|Married but filing jointly||Below 65|
65 or above (one spouse only)
65 or above (both spouses)
|Married and filing separately||All ages||$5|
|Head of a Household||Below 65|
65 or above
|Qualifying widow/er||Below 65|
65 or above
However, if you have net earnings of $400 or over from self-employment, you must file a tax return. This implies most independent contractors and freelancers are to file Form 1040, even if the above gross income limits are not being met by them.
**But do file your taxes by April 15th, even if you are unable to pay taxes.
For a detailed list of who needs to file, check out Chart A, B, and C in the Instructions for Form 1040.
How to get Form 1040
There is a PDF version of Form 1040 provided by the IRS that you can download and fill out manually, but your best option is probably using one of the tax filing services. The skilled professional will walk you through filling out the form, all necessary schedules that go with it, and help with the calculations.
However you choose to obtain this, the Form is divided into sections for you to report your income and deductions to define the amount of tax you owe or the refund you’ll receive.
How to fill out Form 1040
To get started, you first need to get all of your tax documents together, including W-2s, 1099s, and other records of the income and deductions.
Once the tax documentations are in your hands, you have three primary ways to fill and file Form 1040:
- Do it yourself by using IRS Free File
- Do it yourself by using commercial tax software
- Hire paid taxation and bookkeeping services to do it for you
To know more about what all is involved in filing this Form, read on.
On the first page of Form 1040, you are to give your (and your spouse, if married) name, Social Security number (SSN), address, and details about your dependents.
Next, you are to report all sources from where you received income during the year. Space for most common types of income, such as wages, retirement income, interest & dividends, and capital gains are provided.
If you have any source of additional income, you’ll also need to complete Schedule 1 of the Form. Where you fill-in:
- Alimony payments
- Business income (if any, then you’ll also need to complete Schedule C)
- Gains or losses from selling business property
- Rental real estate, royalties, or income from a partnership, C-corporation or trust (if any, then you’ll also need to complete Schedule E)
- Farm income
- Unemployment compensation
The aggregate of all income sources is your total income.
Eligible deductions from your total income reduce the amount of taxable income. Deductions on your Form 1040 come under two broad categories:
1. Adjustment to Income
Adjustment to income (also known as above-the-line deductions) got their name because they appear above the line for adjusted gross income (AGI) on Form 1040. These deductions reduce the AGI, and there is no specific need to itemize to claim them.
- Education expenses
- Contributions to health savings accounts
- The deductible part of self-employment taxes
- Contributions to self-employed retirement schemes and IRAs
- Self-employed health insurance premiums
- Student loan interest
- Alimony payments
If you qualify for any of the above-the-line deductions, you’ll need to complete Schedule 1.
2. Standard Deduction
When you file Form 1040, you may choose to itemize deductions or claim the standard deduction by completing Schedule A. Typically, if your total itemized deductions are higher than the standard deduction available for your filing status or tax bracket, you’ll opt to itemize.
Some of the itemized deductions are:
- Medical & dental expenses
- State and local income
- Property taxes
- Home mortgage interest
- Gifts to charity
- Casualty and theft losses
If you own a business, you may also take advantage of the qualified business income deduction. Your total income, after reducing all available deductions, becomes your taxable income.
On the 2nd page of the Form 1040, you are to calculate your tax liability. If you’re preparing your return by yourself, you’ll need to consult the IRS Instructions for filling up Form 1040 to evaluate your tax using the tax tables.
There are a few other taxes that will require you to also complete Schedule 2. These include:
- Alternative minimum tax
- Self-employment tax
- Additional taxes on early distributions from IRAs or other tax-favored accounts
- Household employment taxes
Page 2 is also the part in which you claim tax credits and list the tax payments already made for the year. Some tax credits, such as the Earned Income Credit, the Child Tax Credit, and the additional child tax credit, are to be listed on Form 1040.
You’ll need to complete Schedule 3 if you have other tax credits to claim, including:
- Foreign tax credit
- Credit for child & dependent care expenses
- Education credits
- Retirement savings contributions credits
- Residential energy credits
Once it’s completed and signed, you can file Form 1040 electronically or send it by mail.
Where to mail Form 1040
If you want to file a physical copy, the address to which you’ll send the returns depends on the State to which you belong. You can find its address in the IRS Instructions for Form 1040.
However, if you can, filing electronically is the preferred way to file IRS Form 1040. The IRS recommends that all eligible taxpayers e-file their returns because it’s easier as well as more secure than paper filing. It will also help you in getting your tax refund faster. Returns can be e-filed using IRS Free File if your adjusted gross income is $66,000 or less. Otherwise, most tax prep software and tax professionals will help you to electronically file Form 1040.
Deadline for Filing Form 1040
You must submit Form 1040 to the IRS by April 15, 2020, for the income made during the tax year 2019. If you need more time, you may request an extension.
Other Related Tax Forms
Above, we’ve listed the few most common forms and schedules you may need to attach to Form 1040, but there are several more you may have to complete and file. Review the IRS Instructions for Form 1040 for any other forms required from you.
Also, if you’re not a sole proprietor, you may be required to file a separate tax return for your business.
- Partnerships and multi-member LLCs file Form 1065 to report the income & expenses of the business. Your portion of the partnership or LLC’s taxable income will be reported on Schedule K-1 of Form 1065, and Schedule K-1 will be required to complete your Form 1040.
- S-corporations file Form 1120S to report the income & expenses of the company. Your part of the S corporation’s taxable income is to be reported on Schedule K-1 of Form 1120S, and Schedule K-1 will be required to complete your Form 1040.
- C-corporations file Form 1120 to report business income & deductions. C-corporations are required to pay the taxes with Form 1120. So while you’ll still need to file your Form 1040 as an individual income tax return, you don’t need to inform of your business income in it, just your personal income.
Errors on Form 1040
If you made a mistake on your Form 1040 and want to make a correction, you can do that with the help of Form 1040X. You have 3-years from the date you filed that incorrect federal tax return to modify.
Most of the tax forms and schedules for the tax year 2020 have not been released by the IRS. This page will be updated as soon as the 2021 Tax Year Forms and Schedules become available. The downloadable forms in this blog are for 2021 Tax Returns (January 1 – December 31, 2019) due by April 15, 2020 and they can be e-filed via eFile.com between early January 2020 and October 15, 2020.
If you are looking for help in filing your income tax returns, Autofiling is the perfect platform to apply. Many services under one roof. At affordable prices.
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Frequently Asked Questions
1. Your marital status and spouse’s year of death (if applicable).
2. The percentage of the costs that the members of your household paid toward keeping up a home.
This is applicable for resident taxpayers for the entire tax year for which they’re inquiring. If married, the spouse must also have been a resident for the whole tax year.
Individuals who use paper tax forms to prepare their returns for e-filing may notice some changes. Only the less commonly used lines were moved to the new numbered schedules and are organized under the general categories, such as income and adjustments to income, nonrefundable credits, taxes, payments, and refundable credits.
1. Schedule 1, Additional Income and Adjustments to Income: to report items such as unemployment, compensation, capital gains, prize or award money, gambling winnings. Or to claim deductions, such as self-employment tax, student loan interest deduction, and educator expenses.
2. Form 1040 (Schedule 2), Tax: owed amounts for the Alternative Minimum Tax (AMT) or if they need to make an excess advance premium tax credit repayment.
3. Form 1040 (Schedule 3), Non-refundable Credits: claim credits of foreign tax credit, education credits, general business credit
4. Form 1040 (Schedule 4), Other Taxes: other taxes owed and need to be paid, such as self-employment tax, household employment taxes, additional tax on IRAs or other qualified retirement plans and tax-favored accounts.
5. Form 1040 (Schedule 5), Other Payments and Refundable Credits: claim a refundable credit other than the earned income credit, American opportunity credit, or additional child tax credit or have other payments, for example an amount paid along with a request for an extension to file returns or excess social security tax withheld.
6. Form 1040 (Schedule 6), Foreign Address and Third-Party Designee: taxpayers with a foreign address or a third-party designee (other than a paid preparer).
For fiscal year filers, the last date is day 15th of the 4th month after your fiscal year ends. However, if the due date is a Saturday, Sunday, or public holiday, the due date is delayed until the next business day. Your returns would be considered filed on time if the envelope has been properly addressed, postmarked, and deposited in the mail by the due date.