Guide to 1040 Tax Forms | Taxes


If you dread the idea of ​​filling out your 1040 Income Tax Form and feel lost, you probably aren’t alone. Tax Form 1040 got overhauled and revamped in 2018, designed to be shorter and hopefully less confusing. But after a few years it is clear that this is not really the case.

“Remember when the IRS said it simplified the tax return and it could be filled out on a postcard-sized form? Well, forget it. We’re back to two pages for 2020, with three additional schedules as part of Form 1040, “says Abby Eisenkraft, CEO of Choice Tax Solutions Inc., a New York-based tax and financial services company and a registered agent at the IRS.

As for this year’s sequel to Income Tax Form 2020 1040, the plot isn’t drastically different, but there are just enough new twists and turns to eventually hold a taxpayer’s interest. (Hint: If you’ve invested in cryptocurrency last year, you’ll definitely want to keep reading.)

What is IRS Form 1040?

A quick definition: Form 1040 is a federal income tax form that most people use to report their tax information to the Internal Revenue Service. The form shows your income, any tax deductions or credits you can claim, and how much tax you will be refunded – or, sigh, how much tax you owe.

(Getty Images)

Other types of 1040 forms

There are several types of IRS 1040 forms that some people may need to complete.

  • Form 1040-NR. If you are a non-resident alien or the representative of a deceased alien, you may need to complete this form. (If you’re looking for 1040NR-EZ on this list, don’t. The IRS threw this form to the curb. It no longer exists.)
  • Form 1040-ES. This form is for people who pay estimated quarterly taxes.
  • Form 1040-V. If you have a balance on the “amount you owe” line of 1040 or 1040-NR, you can fill it out. It is a declaration that accompanies the payment of the taxpayer.
  • Form 1040-X. Did you make a mistake on an already deposited 1040? You can make changes and include them on your Form 1040-X.

Before you sit down to fill out a 1040, make sure you have your W-2 nearby. This will contain the information about your income. If you’re a freelance writer or have had part-time gigs throughout the year, you may have one 1099 – or multiple 1099s with income information.

On the 1040, those first seven lines are all income related questions. You will need to provide information such as interest, dividends, pensions, annuities, IRA distributions, or Social Security benefits.

To make your taxes as easy as possible, you’ll want to have all the documents on hand showing what you’ve earned. If you’re taking your taxes to a tax preparer, you’ll still want to have all of that information – if you don’t upload it to a tax preparer website.

What is the difference between 1040EZ, 1040A and 1040?

Forms 1040EZ and 1040A no longer exist.

When the Tax Cuts and Jobs Act was enacted in December 2017, it consolidated Forms 1040, 1040A, and 1040EZ into one redesigned Form 1040. So, unless you are filling out old tax forms, there is no need to pay 1040A or 1040EZ. any mind.

What is the 1040-SR?

While the 1040EZ and 1040A are no longer, Form 1040-SR is relatively new, and it’s a four-page form that seniors can fill out.

“It’s available for people 65 or older, with an increased font size, but those with more complicated tax situations will need to use the regular Form 1040,” Eisenkraft said.

Four pages might seem like a lot, but remember that the font size is increased which results in more pages.

Who Should Complete IRS Form 1040?

Anyone who declares taxes. That said, Shann Chaudhry, a San Antonio business and estate attorney who often advises clients on thorny tax issues, says, “Most taxpayers will just have to fill out a Form 1040 with no schedules.

Where can I get the 2020 form 1040?

Tax software, of course, has it. If you hire a tax preparer, he or she will have one. Your library may have the forms. You can also find the 2020 Form 1040 on the IRS website. You can complete the form on the IRS website, if you wish, then print it out and mail it.

What you need to know about the new 1040 timetables

There are a number of small but important changes that some taxpayers will want to be aware of:

Cryptocurrency. “One of the most notable changes is the digital currency issue, above the fold of page 1 of the form,” Chaudhry said. “The IRS has cracked down on the proper reporting of income from Bitcoin, Ethereum, and other digital currencies.”

Chaudhry adds that the IRS has been hunting down taxpayers who have not reported, so be sure to report any cryptocurrency activity.

Things get complicated if the virtual currency account is outside the United States, Eisenkraft says. “A (report on foreign bank and financial accounts) may also need to be filed, and additional reports will be required on Schedule B,” the tax form where you report interest and dividend income earned in 2020.

Charitable deductions. In 2018, due to changes to the standard deduction, it became less financially beneficial to itemize items such as charitable deductions. But there has been a change in the Income Tax Form 2020 1040. The IRS has proposed a special provision to make it easier for people to benefit from donations to charities and to encourage charitable giving during the pandemic. .

“If you don’t itemize, you can still claim monetary charitable contributions up to $ 300 on your tax return. If you don’t take the standard deduction, all charitable contributions are reported on Schedule A,” says Eisenkraft .

Changes due to COVID-19. First, the stimulus checks you received are not considered income. You won’t owe tax on your stimulus payments, and they won’t increase your income, so you’ll pay more taxes.

If you did not receive your stimulus check, or if you received some but not all of it, you will want to visit line 30 of Form 1040 and claim your “Recovery Refund Credit.”

As the IRS website states, “Eligible individuals who have not received the full amount of the two economic impact payments can claim the recovery reimbursement credit on their 2020 Form 1040 or 1040-SR. To determine if you are an eligible person or the amount of your Recovery Rebate Credit, complete the Recovery Rebate Credit worksheet in the instructions for Form 1040 and Form 1040-SR. “

And if you’re self-employed and spent a lot of time caring for family members who were sick with COVID-19, check out Form 7202 to see if you can claim equivalent sick leave and vacation credits. family leave as part of the coronavirus response for families first. Act.

When do I have to declare my taxes?

Tax season officially begins on February 12, 2021, when the IRS begins accepting and processing 2020 tax returns.

The deadline for filing your taxes, however, is the traditional April 15, 2021. Last year, the filing deadline was moved to July 15 due to the pandemic.

It seems unlikely that the April 15 date will change this year, but it is possible. Procrastinators, take heart, however. You can still file an extension and not send your taxes until October 15th.

Source link

Comments are closed.