IRS form is One of the official documents that U.S. taxpayers can use to file their annual income tax return.
The IRS form is divided into sections so the taxpayers can report their income and deductions to determine the amount of tax they owe. and also the refund they can expect to receive. Depending on the type of income they report, sometime it may be necessary to attach other forms or schedules to it.
The first page of the Form 1040 is about calculating the Adjusted Gross Income (AGI). The first section of the form requires you to give all the information of income resources such as your wages and salary, tips, interest, dividends, taxable state and local tax refunds, alimony, business income, capital gains, IRA and pension distributions, farm income, unemployment income and Social Security benefits.
There is a box on the form to list “other income” taxpayer receive that doesn’t fit into one of the other categories. he must report all income he receives, regardless of where it comes from, unless it’s tax-exempt. The sum of all of these income items will be calculated as total income.
The second page of Form 1040 begins with AGI and allows a taxpayer to reduce it further with either the standard deduction or the total of his itemized deductions. Itemized deductions include expenses like mortgage interest, unreimbursed business expenses and excess medical expenses as well as many others.
If the total of itemized deductions does not exceed the standard deduction for the filing status, then the taxable income will be lower if a taxpayer claim the standard deduction. After choosing the best deduction, a taxpayer can then reduce the taxable income even more by one exemption for himself, and one for each of the dependents he claims. After subtracting the exemptions, the taxpayer is left with his taxable income, which is the amount subject to income tax.
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