Submitting The 2021 1040 Form Is Required For Any Person Who Gains Income In The U.S. Here Are The Explanations About Its Descriptions, Instructions, Types, Schedules, And Filing Process.
Form 1040 is a tax form issued by IRS and it needs to be filed annually, which is also annually upgraded, such as 1040 Form 2021. It is used by anyone who has to report the income and file for a tax refund to the IRS. It is not to be used by businesses, where there are distinctive forms instead of this document to report profits.
What Is 2021 1040 Form?
Form 1040 is the document used by individual taxpayers to report their income tax and its returns annually. Inside the form, there are sections that must be filled by the taxpayers in order to disclose their yearly taxable income, additional taxes (if there’s any), and tax refund (if there’s any).
How to Fill Out a 2021 1040 Form?
There are three main steps to fill out Form 1040, which would be explained in details below:
1. Fill the First Page: Reporting Income
The 1040’s first page is where the taxpayers should provide their personal information as required in the form. After that, they should report all income sources that they’ve received for the entire year. There are different lines for common income types, including wages, capital gains, income from retirement, as well as interest, and dividends.
Taxpayers who have additional sources of income should file Schedule 1 too. These additional income sources are including:
- Income from business (requires to file Schedule C as well)
- Income from royalties, real estate rental, trust, C-corporation, and partnership (requires to file Schedule E as well)
- Income (or loss) from business property selling
- Income from farming activities
- Compensation for unemployment
- The total income, which is summed from all the sources of income
2. Fill the Second Page: Deductions Claiming
Deducting the total from all income sources results in reduces taxable income. There are two main categories of deductions in this particular form:
a. Above-the-line Deductions
Typically referred to as income adjustments as well, it is named so because these deductions are provided above the adjusted gross income (AGI) lines, within the document. They are meant to reduce AGI and don’t require itemized deductions to be claimed.
Taxpayers who are qualified for these deductions have to fill Schedule 1 as well. These include:
- Retirement plans and IRA contributions for self-employed persons
- Health savings contribution
- Health insurance for self-employed persons
- A deducted part from the taxes of self-employed persons
- Alimony payment
- Interest from student loans
- Expenses for educator
b. Standard Deductions or Itemized Deductions
Taxpayers who submit 1040 Form 2021 are given options to claim standard deductions or itemized deductions by filing Schedule A. in general, it depends on which options give taxpayers the greater amount of deduction.
For those who choose itemized deductions, they need to differentiate taxes between:
- Property and state or local income
- Expenses for medical and dental purposes
- Interest of mortgage
- Charity gifts
- Losses from theft or casualty
c. Figure Out the Tax Liability
For taxpayers who plan to get tax returns by hand, it is necessary to look up Form 1040 instructions by IRS, and see the tax tables to determine the tax.
Taxpayers also may require filling out Schedule 2, if they have:
- Tax for self-employment
- Tax for household employment
- Alternative Minimum Tax (AMT)
- Additional tax from savings accounts such as early IRA distributions
Afterward, the taxpayers also have to list annual payment for tax and claim credits for tax. These include Earned Income Credit or Child Tax Credit.
3. Certify the Document
By this step, all that needs to be done is sign the form, and then fill it out through mail or through electronic means.
Types of Form 1040: U.S. Individual Tax Return
Due to some circumstances, instead of using the standard Form 1040 type, taxpayers may be required to file different versions of it. Here are some of the Form 1040 types:
1. Form 1040-NR
This must be filed by non-resident aliens (or representatives) who:
a. Involved in business or trade within the United States
b. Represent trust or estate that has to file Form 1040-NR
c. Represent the deceased person that has to file Form 1040-NR
2. Form 1040NR-EZ
This form is the simpler version of Form 1040-NR. It may be used by non-resident aliens who have no dependents or exclusively gains income from sources in the United States, which comprised of salaries, wages, tax refunds, tips, and grants from fellowship or scholarship.
3. Form 1040-V
This is the accompanying document as a statement for payment made by taxpayers if they own a balance in the line of ‘Amount you owe’ in Form 1040.
4. Form 1040X
This form is used as a replacement to make changes if the taxpayers overlook information details or create mistakes in Form 1040 which has been filed prior.
5. Form 1040-SR
This is the form version that’s designed specifically for seniors, and it has existed since 2019. It contains bigger fonts, lacks font shading to make the reading easier, and a helpful chart for standard deduction for additional senior standard deductions. The adjustments are minor and barely noticeable but should benefit those who need them.
Form 1040 Schedules
Tax schedules are the IRS-issued forms that used to prepare an extra tax return if the taxpayers gain some type of income or eligible for some types of deductions. Here are some of them:
1. 1040 Form Schedule 1
This schedule is titled Additional Income and Adjustments to Income. It is used to report tax refunds from various income sources such as businesses, partnerships, rentals, tax refunds, and many others. It provides income adjustments such as contributions for retirement plans, taxes for self-employed persons, and others.
2. 1040 Form Schedule 2
This schedule is titled Additional Taxes. It is comprised of two parts. The first part is used when taxpayers want to report additional taxes such as AMT, as well as excess credit (if any) from supports under the Affordable Care Act. The second part is used for self-employed persons who want to file their tax or other circumstances that apply to the condition as well.
3. 1040 Form Schedule 3
This schedule is titled Additional Credits and Payments. Similar to the prior, it also contains two parts. The first part is used to file tax credits such as for education, child care, residential energy, or retirement saving credits. These types of credit cannot be refunded, so they may not surpass the total of taxpayers’ annual income tax (prior to adding the factors such as income tax withholding or others).
4. 1040 Form Schedule A
This schedule is used to itemize income deductions. It is also possible for taxpayers, to choose standard deduction instead of itemizing them using Schedule A – in which the amount depends on their filing status, spouse, and age.
5. 1040 Form Schedule B
This schedule counts the income from interest and dividends, which is required if the taxpayers receive them during the entire tax year in the amount of more than $1,500 combined from all sources, including foreign accounts.
6. 1040 Form Schedule C
This schedule lists self-employed persons’ income and expenses. It is also meant to be used by sole proprietors.
7. 1040 Form Schedule D
This schedule is used to count capital gains and capital losses during the whole tax year. This document may need to be accompanied by Form 8949.
8. 1040 Form Schedule E
This schedule is used for taxpayers who report income and expenses related to flow-through entities (such as partnership, trust, or estates), royalties, and real estate rental.
9. 1040 Form Schedule F
This schedule is used to report farm activities related to income and expenses.
10. 1040 Form Schedule H
This schedule is used to report household employment-related taxes.
11. 1040 Form Schedule R
This schedule is used, to sum up, the disabled or elderly persons’ credits.
1040 Form 2021 Printable Download
1040 Form 2021 is provided by IRS through their official website in the format of a PDF file. However, it is also possible to download it from other sources that can be trusted. Various tax software programs also provide it to help with calculations and instruction.
Regardless of the chosen method, the taxpayer must fill out each section where they report annual income and report tax deductions accurately, to figure out the tax amount owed or refunded.
NOTE: The IRS has not launched the 2021 1040 Form yet. We will update this article when it is released. But, you can check the 2020 1040 Form as referenced below.
Frequently Asked Questions & Answers
1. What is the 1040 Form Used For?
1040 Form is the document used by individual taxpayers to report their annual taxes to IRS – it determines if there is due taxes or refunded taxes.
2. What is the 1040 Income Tax Return Form?
It is one of the two sections of the 1040 Form where you can report the amount of tax refund that you expect to receive.
3. What is the Purpose of the 1040 Form?
The purpose is to file annual income-related taxes for taxpayers in the United States.
4. Who Files a 1040 Form?
All working people in the United States are required to file it, from employees in companies, investors, and self-employed persons such as freelancers or independent contractors.
1040 Form 2021 can be filed both through physical mailing using paper copy or filed electronically using the e-file system from the US government. For mailing, you may see the entire list of addresses on the IRS official website depending on where you live and your circumstances.