Form 1040: U.S. Individual Tax Return

Form 1040 is one of the most commonly filled out tax forms in the U.S. tax system. It’s the standard IRS income tax form taxpayers use to file annual income tax returns. Because so many people need to fill it out every year, it’s important to understand IRS Form 1040 and what goes into it. While the 1040 instructions are helpful for this, we’re here to outline basics of the 1040 form in easy-to-understand language.

What is a 1040 form?

Form 1040, formally known as the “U.S. Individual Income Tax Return,” is the IRS tax form you use to report all types of income and expenses, claim tax deductions and credits, and calculate your tax bill or refund for the tax year. The Internal Revenue Service (IRS) releases an updated version of Form 1040 each filing year.

What are the types of Form 1040?

There are now four variations of the IRS form:

• Form 1040 – This post will cover the details of the form.
• Form 1040-SR – This tax form simplifies tax-filing requirements for those who are 65 or older.
• Form 1040-NR– This form is the primary form used by nonresident aliens for filing a U.S. tax return. 
• Form 1040-X – This form is used to file a tax extension.

The current version of Form 1040 has three schedules that cover items not included on the base form. Also, some types of income, deductions, and credits require supporting schedules in order to provide details about the item.

Who should file Form 1040?

As tax season approaches, you might find yourself wondering, “Do I need to file Form 1040?” Fear not, because we’re here to demystify this very important tax form’s who, what, and why.

Millions of U.S. taxpayers file a 1040 tax form each year. It’s the most commonly used tax form to report income, claim certain credits, and identify how much tax you owe (or will get refunded.)

First, figure out if you need to file taxes based on the thresholds listed in this article. These are the adjusted gross income (AGI) thresholds for tax filing. If your gross income is at or above these thresholds for your filing status, you must file a tax return. Note that filing thresholds are lower if you can be claimed as a dependent. If your income is under these thresholds, you must also file a tax return if any of these situations apply to you:

• You have Self-employment income of $400 or more
• You owe any special taxes, including:
  • Tips you didn’t report to your employer
  • Household employment taxes.
  • Additional taxes on IRAs or other qualified plans.
  • Your employer didn’t withhold Social Security and Medicare taxes from your pay.
• You received advance payments of the Premium Tax Credit.
• You receive Health Savings Account (HSA) distributions.

Even if you are not required to file a tax return you may wish to do so in these situations:

• You are due a refund of withheld taxes.
• You qualify for a personal refundable credit, such as the earned income credit (EIC), additional child tax credit (ACTC), or refundable American opportunity credit (AOC).
• You’re eligible for the Premium Tax Credit.

IRS Form 1040 instructions

The 1040 form includes the base form and three schedules needed to report additional items such as deductible IRA contributions and self-employment tax. The 1040 form instructions explain what each schedule is used for.

In addition to these schedules, additional supporting schedules are needed to provide details on some kinds of income and deductions, such as self-employment and rental income and itemized deductions.

In many instances you don’t need anything other than the base form. However, if your tax return is more complicated (like if you claim certain tax deductions, credits, or owe additional taxes), you’ll likely use one or more schedules and forms.

What changes have been made to 1040 forms?

The IRS made no significant changes to Form 1040 and most of its supporting schedules this year. Schedule 3 has been revised to add lines for home energy and clean vehicle credits.

What are the various Form 1040 schedules?

You can think of schedules as an extra form the IRS uses to get a complete and accurate depiction of your financial life related to your tax filing. If you e-file your return (which most people do), your online program or tax pro will generally determine the Schedules you’ll need.

Here’s a summary of each 1040 tax schedule:

Supporting schedules:

Schedule 1: Additional Income and Adjustments to Income

This schedule should be used for business, farm, rental, and many other forms of income. It also includes “above-the-line” deductions such as contributing to an IRA and deducting one-half of self-employment tax.

Schedule 2: Additional Taxes

Schedule 2 is used for Alternative Minimum Tax and other special taxes you may owe such as self-employment tax, tax on early distributions from IRAs, and additional Medicare tax. .

Schedule 3: Additional Credits and Payments

Here’s where many of the personal credits go, including education credits, the Child and Dependent Care Credit, Saver’s Credit, energy credits, the Premium Tax Credit, and the Foreign Tax Credit. Note that the earned income credit and child tax credit are claimed on the Form 1040.

Additional schedules you may need:

Schedule A: Itemized Deductions

Schedule A allows you to itemize deductions if you choose not to take the standard deduction. Think medical expenses, state and local taxes, mortgage interest, and charitable contributions – these are all acceptable deductions!

Schedule B: Interest and Ordinary Dividends

Schedule B is the go-to for reporting interest and ordinary dividends. So, if you have a bank account or investments, this is where you spill the beans on the interest and dividends you’ve earned.

Schedule C: Profit or Loss from Business

For the entrepreneurs out there, Schedule C reports business income and expenses for sole proprietors. Partnerships and corporations (including LLCs taxed as corporations) don’t report business income on the Form 1040, instead the business files using the partnership and corporate returns (Forms 1065 and 1120).

Schedule D: Capital Gains and Losses

If you’ve played the stock market or sold some investments, Schedule D is your ticket to report capital gains and losses.

Schedule E: Supplemental Income and Loss

If you earn supplemental income from rental, royalties, partnership, or S corporation income it lands on schedule E.

Schedule F: Profit or Loss from Farming

If you’re a farmer, Schedule F reports farming income and expenses. This Schedule lets the IRS know if your agricultural endeavors are blooming or facing a drought. Learn more about using Schedule F for farming income tax.

Schedule H: Household Employment Taxes

If you have certain household employees like a nanny, cleaning crew, or personal assistant, use Schedule H to figure out household employee taxes.

Schedule J: Income Averaging for Farmers and Fishermen

Schedule J is used to elect to figure your income tax by averaging, over the previous three years, all or part of your taxable income from your trade or business of farming or fishing.

This election might lower taxable income from farming or fishing if your income is high and your taxable income for one or more of the three prior years was lower.

Schedule R: Credit for the Elderly or Disabled

Use schedule R to claim the Tax Credit for the Elderly or Disabled.

Schedule SE: Self-Employment Tax

Gig workers, this one’s for you. Schedule SE calculates your self-employment tax, covering your contributions to Social Security and Medicare.

Schedule EIC: Earned Income Credit

If you have a qualifying child this schedule is needed to claim the Earned Income Credit. You don’t need it if you’re claiming the Earned Income Credit without children.

Schedule 8812: Child Tax Credit

If you’re claiming the Child Tax Credit, use Schedule 8812 to do so.

Get help filing your 1040 tax form

In the grand scheme of things, Form 1040 is the main ticket to filing your tax return. Whether you choose to file with a tax pro or file with H&R Block Online, you can rest assured that we’ll get you the biggest refund possible.