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Form 1040 is the basic tax form everyone who pays taxes must fill out when filing Federal income taxes. Today, there’s just a single version of Form 1040.
Depending on your tax situation, you may need to attach other forms and schedules to your 1040.
Why Do I Need to File Form 1040?
When you file your taxes, you’ll report your income for the year on Form 1040. All tax filers will use the same form. The previous forms, such as 1040EZ and 1040A, are no longer valid.
These changes were brought in as part of the Tax Cuts and Jobs Act (TCJA), enacted by President Donald Trump in 2017.
Nonresident aliens may use Form 1040NR, however.
How to Fill Out Form 1040
Form 1040 is made up of two pages. You’ll supply your personal details on page one. These will include your name, your filing status, and your Social Security Number (SSN). You’ll need to add the same information for your spouse if married and filing jointly.
Anyone claiming dependents must also add the personal information of these dependents. Since the TCJA, all dependents must have their own SSNs. If claiming the child tax credit or another credit for dependents, you’ll need to tick a box next to the space for your dependents’information.
There’s also a box you need to tick that tells the IRS whether you have health insurance, as well as any healthcare exemptions for the tax year.
You’ll also need to list your occupation and sign the first page.
Listing Your Income
Now we move onto the second page. Lines one to seven are where you’ll tell the IRS about your income for the tax year. You should already have your W-2 form if you were a salaried employee. The information supplied via your W-2 form will be included on Form 1040.
You should also include any other sources of income, such as any interest income, annuities, dividends, and Social Security benefits. You can find a full list of the different sources of income you should include via the guidance on the IRS website.
Using the different sources of income you have, you’ll then calculate them and add the total figure for your adjusted gross income. This should be included on line seven.
How to Calculate Your Adjusted Gross Income
So how do you adjust your income?
These are known in tax filing as types of above-the-line deductions. They get this name because these deductions are removed from your total income. The adjusted gross income figure is how the Federal government determines how much tax you pay. Tax is based on this figure only.
To take these deductions, you’ll need to include different forms together with Form 1040. The previous version of Form 1040 included 15 lines that allowed you to make these deductions. These lines are now spread through Schedules 1 to 6. So, you only need to include these schedules if you’re claiming specific deductions.
Take note that deductions available in previous years have now been removed. For example, you can no longer claim deductions for college tuition and moving fees.
Considering Taxes and Credits
Now that you’ve worked out your adjusted gross income, it’s time to work out the different tax credits you’re able to claim.
Either you’ll claim the standard deduction on line eight, or you’ll itemize your deductions. For qualified business income deductions, you’ll need to use line 9. On lines 10 to 15, you can enter the different amounts for tax credits.
For example, line 12a will be where you enter the amount for the child tax credit. Any withheld Federal income taxes can be entered on line 14.
Claim a Tax Refund
The following section will consider your tax refund if you’re eligible for one.
For this section, look at line 18 and line 15. If the amount on line 18 is larger than the amount on line 15, this means you’re able to claim a tax refund.
Just take away the amount from line 15 from that on line 18 and enter the amount on line 19. That’s how much the Federal government owes you.
Through the rest of the refund section, if you’re eligible for one, you’ll need to enter your bank details. You may also attach Form 8888 if you wish to get your refund in the form of savings bonds. It’s also possible to claim your refund as a paper check.
How Much Do I Owe to the Federal Government?
If you’re not eligible for a refund and you owe money to the Federal government, you’ll need to pay the IRS. This is what appears at the end of the second page of Form 1040. It’s called Amount You Owe. The amount you need to pay should be entered on line 22.
If you owe any penalties, include these on line 23. Form 1040 includes instructions for underpayment penalties.
How to File Form 1040
This is the most basic form used for filing your income taxes via the IRS. It doesn’t matter what situation you’re in because Form 1040 is the base form, so every taxpayer must submit one to the IRS at the start of the year.
Finally, if you want to make filing your 1040 easy, you should consider using some online tax preparation software. You’ll be able to follow some step-by-step instructions on how to fill out Form 1040. The software will plug all the numbers into the right places, thus taking all the stress and hard work out of filing your taxes.
The Child and Dependent Care Tax Credit is designed to help hard-working parents and guardians to work and look for work as they care for a child or dependent. It also covers those who are caring for disabled children and adults.
How Much Will I Get Back for Childcare Tax Credit?
Depending on several factors, the childcare tax credit can be worth anything from 20% to 35% of your total care expenses.
Your income is the primary factor in deciding how much of your care expenses you can claim back. For example, to qualify for the full 35%, your income must be below $15,000.
The percentage you can claim back continues to decline by 1% for every additional $2,000 earned above the initial $15,000 limit. This will reach a maximum of $20,000. A taxpayer earning $43,000 or more will only receive 20% back through this tax credit.
The maximum you can claim is $3,000 in care expenses for one qualifying dependent and $6,000 for two qualifying dependents.
In total, the maximum this credit can be worth is $2,100, which is based on two or more children and $6,000 in expenses for the year.
However, keep in mind, the qualifying expenses included will be reduced by any other benefits you receive from your employer. This is also a non-refundable tax credit.
Which Conditions Do Taxpayers Need to Meet to Claim This Tax Credit?
The first condition of claiming the childcare tax credit is you must have a form of earned income, such as a salary from your job. If you’re married and filing jointly, your spouse must also have a form of earned income.
This credit is available to all filing statuses, apart from married and filing separately. Although those who are married must have both parties earning an income, this requirement is waived if you’re disabled or are currently a full-time student.
The credit is designed to pay for the care of a qualified dependent. So, you must have paid for these services. However, the person providing the care cannot be a parent or spouse of the qualifying dependent. Furthermore, the caregiver cannot be under the age of 19.
The purpose of the care must be so you and your spouse can work, find work, further your education full time, or if you happen to be disabled.
Summer camps also count as a form of care. However, overnight camps don’t.
Who Qualifies as a Dependent for this Tax Credit?
Any child under the age of 13 will automatically qualify for the purposes of the childcare tax credit. For those over the age of 13, they only qualify if they’re permanently and totally disabled mentally or physically.
Any qualifying dependent must have lived within your household for at least half of the year. There are certain exceptions to this, such as if the child’s parents are divorced or separated. It also covers if a child was born during the tax year or died during the tax year.
How Can I Claim the Childcare Tax Credit?
You’ll need to fill out Form 2441 in order to claim this tax credit. You must provide the Social Security Number (SSN) of the qualifying person. You’ll also need to include some personal information from the caregiver you paid, including their taxpayer identification number.
A qualifying dependent may only be claimed on one tax return. The IRS has tiebreaker rules when a qualifying dependent is claimed on more than one tax return. This usually happens when two divorced parents are attempting to claim the same child as a dependent.
The earned income credit is one of the most valuable credits for those with low or moderate incomes. To claim it you will need to file an income tax return, even if you don’t necessarily owe anything in taxes.
There are a number of qualifications involved. So, if you plan to claim the Earned Income Credit, here’s what you need to know.
What is the Earned Income Credit (EIC)?
The EIC is a type of tax credit available to taxpayers earning either a low or moderate salary. For the tax year, the credit will be worth a maximum of $6,557.
It’s a tax credit not a tax deduction, so the EIC will reduce the amount of tax you owe directly, rather than your taxable income.
The philosophy behind the EIC is to counter social security taxes paid by taxpayers with lesser means.
Will You Qualify for the EIC?
The EIC has a range of qualifications attached, but they are quite simple to understand. If you meet the following qualifications, you will be eligible to claim the EIC:
Your filing status must either be single or married but filing jointly.
You must have a form of earned income either through a job or through self-employment.
You can’t earn more than $3,600 in investment income.
You aren’t allowed to file Form 2555 or 2555-EZ, which are both designed for those claiming foreign earned income and exclusions.
However, if you are a member of the military or the clergy there are special rules attached. Additionally, there are special rules for people with disabilities and people who have children with disabilities.
What are the Adjusted Gross Income Limits for the EIC?
The adjusted gross income limits are determined by your filing status and the number of qualifying children you have.
For single filers the limits are:
0 Children – $15,570
One Child – $41,094
Two Children – $46,703
Three or More Children – $50,162
For taxpayers who are married and filing jointly the limits are as follows:
0 Children – $21,370
One Child – $46,884
Two Children – $52,493
Three or More Children – $55,952
The number of children will also influence the maximum credit amount for the EIC. You can only claim the full $6,557 if you have three or more qualifying children. If you have no children, the maximum amount is $529.
The maximum limits are $3,526 and $5,828 for one and two qualifying children respectively.
What are the Rules for Qualifying Children?
Your child must qualify in order to be eligible for EIC purposes. The following criteria must be true:
Your child must have a Social Security Number.
You must have a relationship with the child, whether they are your biological child, grandchild, adopted child, or stepchild.
At the end of the tax year the child must be under the age of 19. They can be under the age of 24 if they are a full-time student.
There are no age limits if the child qualifies as totally and permanently disabled.
The child must live with you or a spouse in the US for at least six months of the year.
Your child hasn’t been claimed by another taxpayer.
What’s the Process for Filing for the EIC?
You need to file an income tax return with the Federal government to claim the EIC. You will need to fill out and attach Schedule EIC to your tax return.
On Schedule EIC you will enter the information regarding your qualifying children.
The IRS has guidance and worksheets to help you work out how much of the EIC you can claim. Your calculations should then be added to the Form 1040.
Before you begin working out how much you can claim, you should have the personal and Social Security information of yourself and any qualifying children. You must also have any statements detailing any income you have received in the past year. This includes any type of investment income.
If you have any childcare expenses for dependent children, this will also become a factor.
Finally, did you get a previous EIC claim rejected? If you believe this is in error, you can appeal through Form 8862.
Home improvements are a popular way for taxpayers to claim a tax credit and upgrade their homes in the process. For new windows, it’s possible to make a tax deduction. The current tax credits for home improvements are expected to remain in their current form for the next five to seven years.
Claiming New Windows on Your Tax Return
There is a range of different window types that qualify for a tax deduction, including casement, egress, and double-hung. The stipulation is that they must meet Energy Star standards.
Partial improvements are also eligible, so you don’t need to replace every window in your home to qualify for this tax credit. It also applies if you added a window that wasn’t there previously.
Any entry, interior, and garage doors you installed this past tax year are also eligible for a tax deduction. Like with new windows, they must meet the standards of Energy Star.
Again, partial replacements are also eligible, as are adding new doors that weren’t there previously.
You can claim 10% of the cost of new doors, up to a maximum of $500.
Can You Claim a Tax Deduction for Vinyl Siding?
Vinyl siding is not eligible for a Federal tax deduction. But many states have a sales tax deduction on vinyl siding. States like Minnesota allow you to deduct all sales taxes on the cost of vinyl siding. Just remember to keep the receipts.
The sales tax deduction applies to new installations and replacements for vinyl siding.
How to File for Your Tax Deduction or Your Sales Tax Deduction
You should only file for deductions if you kept the certification statement issued by the manufacturer. In the event you get audited, you’ll need to present these statements to the auditor, or it could be revoked.
For sales tax deductions, you’ll also need to maintain the same receipts. You should check the requirements with your state to make sure, though. Many states don’t offer the same deductions.
Make sure you check the Energy Star website for a list of the different windows and doors that meet Energy Star requirements. These requirements change all the time, so it’s better to be safe than sorry.
If you have trouble filing, you may want to consider using online tax filing software to help you file. They will make it easier to claim the energy tax credit.
They will ask you simple questions about your expenses, tell you which deductions you qualify for, and fill in all the right forms for you.
For any Federal energy deductions, you’ll need to fill out Form 5695, which will be done automatically when you file online.
The child tax credit is a type of tax credit available to parents and guardians who want to reduce the amount of tax they pay this year.
This tax credit will take your overall tax bill and reduce it dollar for dollar. It’s one of the most rewarding types of tax credits working people can take. If you have a qualifying income, you may be able to take the full value of the child tax credit.
It all depends on how many qualifying children you have and how much you make, though.
What are the Income Limits for the Child Tax Credit?
For married couples filing jointly, the credit begins to phase out as early as $110,000 in income. However, when you take your modified adjusted gross income into account, it can be as high as $200,000.
To be eligible for the child tax credit, married couples filing jointly must make less than $400,000 per year. For all other tax filing statuses, the phaseout limit is $200,000.
The child tax credit calculator can help you figure out if you are within the income limits and how much you can get back.
Your adjusted gross income is what matters when it comes to the child tax credit.
How Much is the Child Tax Credit Worth?
If you’re eligible to claim the full tax credit, the child tax credit is worth $2,000 per qualifying child.
The value of the child tax credit has increased substantially since 1998 when it was worth just $400 per qualifying child.
How Can You Claim the Child Tax Credit on Your Taxes?
To calculate how much you’re able to claim through the child tax credit, you’ll itemize it on IRS Form 1040.
To make sure you get the maximum amount, you’ll also need to use Schedule 8812.
If you’re using one of the many popular tax preparation platforms, all your calculations will be carried out automatically based on the information you provide.
Am I Eligible to Claim the Child Tax Credit?
Additionally, before claiming, you’ll need to refer to the guidelines given by the IRS. Assuming you already know your income, you’ll need to check the five other pieces of criteria to ensure you can make a claim when you file your tax return.
These are:
Citizenship – All qualifying children need to be residents of the US, and you need to be able to claim them as a dependent on your tax return.
Age – By the end of the tax year, the qualifying children must be under the age of 17.
Relationship – The child must be related by blood, a grandchild, stepchild, or an adopted child. If they’re an adopted child, they must have lived with you for the entire tax year.
Dependency – A child can only be claimed as a dependent on a single tax return. If parents are separated, they must decide who will be claiming the credit.
Residency – The child must live with you for at least half of the tax year. In special cases, there are some exceptions to this rule.
Can the Child Tax Credit Add to My Tax Refund?
The answer is yes. This is a type of tax credit that reduces your tax bill dollar for dollar. It can also lead to a tax refund.
This tax credit was designed to enable the families who can claim more in child tax credit than their tax bill to get a portion of the credit refunded to them.
How to Claim the Child Tax Credit
You don’t need to worry about figuring this out. Online tax filing makes it easy to claim the child tax credit. After asking you a few simple questions about your family, the tax software will determine for you who qualifies as a dependent on your tax return and how much you qualify for.
That way, you’ll get the biggest tax refund possible with the least amount of hassle.
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