What Is Tax Form 1040?

IRS tax form 1040 might give you the best year-end tax outcome.

What is a 1040 form? The 1040 tax form is an income tax return IRS form used by many individual U.S. taxpayers. Every year at tax time, U.S. taxpayers determine whether to file using IRS tax forms:

U.S. homeowners and business owners tend to choose the 1040 tax form to take advantage of all possible tax deductions. Here’s everything you need to know about IRS tax Form 1040, one of the most common federal tax forms used.

What Is Tax Form 1040?

Form 1040 is the standard federal income tax form used to report an individual’s gross income. It’s more extensive than the shorter 1040A and 1040EZ Tax Forms and allows taxpayers to claim numerous expenses and tax credits, itemize deductions and adjust their income. According to the IRS, here’s what you need to have ready when you begin filing your Tax Form 1040 this year:

  • Proof of identification
  • Filing status and residency status
  • Social Security Numbers for you plus your spouse and any dependents
  • Date of birth for you plus for your spouse and any dependents
  • Copy of your past tax return
  • Statements of wages earned (e.g., W-2, W-2G, 1099-R, etc.)
  • Statements of interest/dividends from banks, brokerages, etc.
  • Proof of any tax credits, tax deductions, or tax exclusions
  • Your bank account number and routing number, if you opt for direct deposit

Is the IRS Tax Form 1040 Your Best Tax Filing Option?

Form 1040 is a solid option if you have a taxable income of $100,000 or more, and you want to reduce your tax bill during tax preparation by itemizing deductions on Schedule A. The Internal Revenue Service recommends taxpayers under 65 use these tax forms if they meet the deduction limits listed below. For taxpayers over 65, the IRS deduction level recommendations are slightly higher:

  • Single taxpayers with deductions over $6,300
  • Married filing jointly taxpayers with deductions over $12,600
  • Married filing separately taxpayers with deductions over $6,300
  • Head of Householder over $9,300
  • Qualifying widower with a dependent child over $12,600

Itemizing deductions on income tax returns is the most common reason taxpayers elect to use Form 1040. This tax form also reports:

  • Income, credits, adjustments or corrections that cannot be reported on other federal income tax forms
  • Uncollected taxes or unreported income
  • Repayment of the first-time homebuyer credit
  • Certain bankruptcy situations

Related: Every Tax-Filing Status Explained

How to Use the Tax Form 1040

The 1040 tax form can be intimidating. Organizing your tax preparation information makes this income tax return easier to complete. Form 1040 is divided into three sections that collect personal, income, and deduction information. To avoid being overwhelmed, take it one section at a time.

Section 1: Personal Information

Gather the names and Social Security numbers of everyone living in your household. Follow the prompts to fill in all personal information. You’ll provide basic information such as your marital and filing statuses — if you’re single or married, and if married, whether you’re filing together. Here, Form 1040 will also ask you to claim your exemptions. These tax exemptions should include:

  • You
  • Your spouse
  • Your children

Section 2: Income Information Section

This section of the 1040 tax form asks about your earned income, which can be found on the W-2 federal income tax forms sent to you by your employer. To complete this section of your income tax return you’ll also need to gather information on additional income received via:

  • Alimony
  • Pensions
  • IRAs
  • Stock dividends
  • Interest income

Section 3: Adjustments to Income

The third section differentiates the 1040 tax form from other federal income tax forms. Using Schedule A will allow you to decrease your taxable income by deducting allowable expenses for items you have paid for. Allowable deductions might include:

  • Medical expenses
  • State taxes and local
  • Real estate taxes
  • Home mortgage interest
  • Personal property taxes
  • Mortgage insurance premiums
  • Gifts to charity
  • Casualty and theft losses
  • Unreimbursed employee expenses
  • Tax preparation fees

Calculate your adjusted gross income by subtracting your total deductions from your reported income. The 1040 tax form provides adjustments to income through allowable deductions. More deductions lower your AGI resulting in less federal tax owed. When calculating your final federal taxes, if the amount of taxes you have already paid, as shown on your W-2, is higher than the amount of taxes you calculated using Form 1040, then you’re eligible for a tax refund.

Up Next: Take the Quiz  Are You Filing Your Taxes Correctly?