Individual Income

All those who prepare taxes for individuals are familiar with Form 1040. This is the form that the IRS requires to be used for the filing of individual taxes. There is a series of seven forms that have the 1040 designation. They include 1040, 1040A, 1040EZ, 1040EZ-T, 1040NR, 1040NR-EZ, and 1040X. The Form 1040 is the general form; however, all individuals do not have the same financial situation. Some people have income only from their employers; others have income from investments; and still, there are those generate income from their businesses.

Also, tax benefits, such as the stimulus checks, are intended for U. S. residents only. All of these different scenarios make it necessary for the IRS to create variations of the Form 1040 for different situations. This paper will specifically focus on Form 1040, its sections, and requirements. This is an effort to give some general information about the Form 1040. No information presented here is intended as tax advice and should not in any way be construed as tax advice or used as such. For those in the tax preparation business, the Form 1040, U. S. Individual Income Tax Return, is commonly called the long form. This is the form for the individual who has a complicated tax situation. For example, the individual who has to list all deductions or take capital gains or loss would have to use this long form.

The form itself is only two pages long, but it has 11 attachments or schedules that may be required depending on the invidual’s situation. The 11 attachments are Schedules A, B, C, D, and E, Schedule EIC, Schedules F, H, J, and R, and Schedule SE (Form 1040, 2008).

These schedules will be explained at their appropriate points on the form. The Form 1040 has 14 sections beginning with the Label (Form 1040, 2008). The Label is the section where information on the main filer(s) is recorded. This information inlcudes name(s), address, and social security number(s) of the main filer(s). The main filer is always an individual unless it is a husband and wife filing jointly. This is the only time when two persons can be listed on the Label section. Immediately below the Label section is the Presidential Election Campaign section.

When a Presidential Candidate decides to take government financing, this is where the money comes from. In this section, the filer is asked for $3 to be contributed to the funds that support the Presidential Election. For joint filers, the contribution could be as much as $6. The section is very clear about the fact that the contribution does not increase the filer’s tax liability or decrease the refund. The contribution is completely voluntary. The Filing Status section comes after the Presidential Election Campaign.

A filer would have five options to choose from. The filing statuses are (1) Single, (2) Married filing jointly, (2) Married filing separately, (4) Head of household (with qualifying person), and (5) Qualifying widow(er) with dependent child. At this point in the Form 1040, no financial information is yet required; however, one’s filing status could make a difference in terms of tax liability or refund. The next section after the Filing Status is called Exemptions. The IRS allows filers to take exemptions based on the number of people they support as dependents.

Dependents are not only children that a filer may support. A dependent could also be a parent who is living with the filer. As long as a person who is a relative depends on a filer for support, that person can be claimed as a dependent. To claim the dependent, the filer must have the person’s legal name and social security number. If a dependent is 12 years old or younger, that dependent could be used to get the Child tax credit if the filer qualifies for that taxt. After this section, then the form begins to require financial information.