One form, two pages, 24-ish lines, and lots of stress. Meet the IRS 1040.
Your tax return is where you tell the gov how much money you made throughout the year. Plus any discounts you qualify for. How you fill it out determines whether you owe them or they owe you. We're breaking it down, so you won't make any mistakes...or shed any tears.
1. Filing status
There are five options. You’ll recognize most of the words, like single, married, and widow(er). Filing jointly is a better deal for most couples, but it means you’re both equally responsible for any money that’s owed. You might be a head of household if you have a live-in dependent that's not your spouse. The IRS can help you decide if you’re not sure.
2. Basic info
Where you put your name, age, mailing address, social security number, and all that jazz. If you’re filing jointly, you’ll need to add your spouse’s name and SSN.
Psst...checking the “Presidential Election Campaign” box won’t impact your bill. Most people leave it blank. But for everyone that checks yes, the IRS puts $3 toward a public fund that major candidates on any side of the aisle can tap.
4. Income & Deductions
Time to whip out your W-2s and 1099s. Your normal wages go on Line 1. Everything else – interest, dividends, capital gains, IRA distributions, Social Security benefits, etc. – goes on Lines 2-6. If you have a side biz, use a Schedule 1 form and Line 7a. Add it all up on Line 7b.
Then the big choice: to itemize or not to itemize your deductions. Those are costs the gov lets you subtract from your taxable income. You won’t need to do anything extra to get the standard, flat-rate deduction, but you should probably do the math to see if itemizing means more savings. If you do itemize, the Schedule 1 and Schedule A forms can help.
5. Tax & Credits
List any dollar-for-dollar tax breaks you’ve earned by doing something the gov likes. And any federal income you’ve already paid.
6. Doing the Math
Time to put it allll together. And see what you owe...or what you’re getting back. Best of luck.
7. Sign, Seal, Deliver
You got this one. After you send it off, you can get back to thinking about anything other than taxes until next year.
Like setting your clock forward and losing an hour of sleep, filing your tax return is a non-negotiable every spring. (Even if you live in Hawaii or Arizona.) Understanding what Form 1040 is and completing yours correctly can help you keep the right amount of money in Uncle Sam’s pocket – and more in your own.