Each year people must file their taxes with the Internal Revenue Service. Form 1040 is the form a taxpayer will use to calculate their tax liability for the year. Taxpayers must then pay their tax liability for the year or they could face a penalty. If a taxpayer paid more in taxes than she owes for the year, she can receive a tax refund.
Determine your Income for the Year
Your income will go on the Income section of Form 1040. Match the type of income with the income described on the line. Add together the lines in the Income section to determine your total income.
Determine your Above-the-line Deductions
Above-the-line deductions go on the Adjusted Gross Income section of Form 1040. Add together the lines in the Adjusted Gross Income section to determine your total above-the-line deductions. Subtract your above-the-line deductions from your total income. This is your adjusted gross income.
Standard Deductions or Itemize?
Choose if you are itemizing your deductions or taking the standard deduction. Only itemize your deductions if you have more deductions than your standard deduction.
Determine your Exemption Amount for the Year
This amount will depend on your number of dependents, your age and your eyesight. Subtract the deductions and exemptions from your adjusted gross income. This amount is your taxable income.
Look Up your Taxable Income on the Form 1040 Tax Tables
This is the total amount of tax due.
Read More: How to Mail the Form 1040
Subtract any credits you may receive from the Tax and Credits section of Form 1040 and add any additional taxes, such as the self-employment tax, from the Other Taxes section.
Subtract Withheld Income Tax
Subtract any income tax that has been withheld from your pay or estimated payments you have made. The result will be the total amount due for the year.
Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.