Having to use a new form has a fortune of taxpayers rattled, but the modern 1040 form is n’t arsenic daunting as its predecessors. In fact, many taxpayers who ‘ve completed their returns have found the short 1040 to be a hint of fresh air out — and a fortune easier to navigate than they ‘d expected. Below, we ‘ll go through the new 1040 form tune by telephone line to help give you the confidence you need to get your returns prepared this year .
Contents
Front page: Personal information
The integral first page of the form is dedicated to providing personal data. You ‘ll need your name, address, and Social Security number, a well as similar information for family members like a spouse or children .
even though pendent exemptions went away in 2018 as function of reform, you ‘ll distillery need to list any dependents you have on the front of the 1040 imprint. That will potentially make you eligible for either the child tax citation or the fresh credit rating for other dependents if you qualify.
Lines 1-7: Income
The first gear seven lines of the back page of the 1040 class are devoted to counting your income. Wages go on line 1, while pastime and dividends go on lines 2 and 3 respectively. only taxable concern goes in wrinkle 2b on the right, with tax-exempt security interest getting reported individually on line 2a. similarly, total dividend income goes in wrinkle 3b, with qualify dividends that get taxed at a lower rate going on line 3a .
total income from pensions or IRA distributions goes on production line 4a, while sum Social Security benefits get put on line 5a. The taxable portions of those distributions go on lines 4b and 5b respectively .
Line 6 has you add all those numbers improving. If you have other sources of income beyond the five listed on the shape, you ‘ll need to include the raw Schedule 1 and put that amount in the space indicated .
For line 7, you ‘ll need to look at the available adjustments to arrant income. Items like deductible IRA contributions, educator expenses, or student loanword interest payments can often reduce your income. Line 7 then gets your adjust crude income that reflects any reductions .
Lines 8-10: Deductions
shape 1040 has simplified deductions into just two lines. Line 8 is for the standard deduction for most taxpayers, but if you itemize, the final result of your workplace on Schedule A goes there. Line 9 applies only to those who have commercial enterprise income from a sole proprietorship, partnership, specify liability company, S corporation, or other entity that qualifies for the special 20 % tax write-off for pass-through income.
once you have those deductions figured out, subtract them from your adjusted gross income to get your taxable income on production line 10 .
Lines 11-18: Taxes and credits
Line 11 is where your even tax goes. For most taxpayers, that involves taking the taxable income number and using the tax table to look up the meet tax due. however, some taxpayers owe extra taxes. For them, numbers from Schedule 2 go into the concluding production line 11 sum, while those owing taxes from Schedule 4 will put the allow sum on line 14 .
The 1040 kind besides incorporates tax credits into its calculations. Most credits go on line 12, with the child tax credit going into channel 12a and others from Schedule 3 getting added in. Refundable credits like the earn income credit, extra child tax credit, and educational credit go on line 17, with Schedule 5 offer more obscure refundable tax credits. once you put in the sum of tax you had withheld from your paychecks on line 16, you ‘ll have all the numbers you need to calculate your final tax on line 18 .
Lines 19-23: Refund or amount owed
finally, the final character of the modern 1040 deals with whether you owe tax or will get money back from the IRS. If you ‘ve paid more than your tax indebtedness, then line 19 calculates your overpayment, with pipeline 20a lease you choose how much you want to get binding in a refund. The rest of agate line 20 lets you put in your trust information to have a refund immediately deposited if you choose. If you want to use part of your overpayment to apply toward estimated tax payments in 2019, put that measure on lineage 21 .
If you ‘ve paid besides little tax, then the sum remaining goes on line 22. Penalties can apply if you have n’t had enough tax withhold or paid estimated taxes throughout the year, and line 23 is for that total.
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Enjoy the shorter 1040
That might not sound like the simplest tax form possible, but it ‘s a fortune better than the 79 lines that the 1040 from 2017 had. Tax reform has made the 1040 much shorter, and in many ways, it ‘s easier to follow the think process behind tax with the childlike form .