The 1040: box-by-box
Do you plan to itemize deductions, have
numerous income adjustments, owe or paid taxes in addition to your
income taxes or can claim several tax credits? Then welcome to Form
1040, the granddaddy of all federal income tax returns.
If this is the first time you've filed a 1040
instead of the shorter 1040A or 1040EZ forms, you'll immediately
see the differences. Don't be intimidated. Yes, it's longer, but
you'll also find many similarities to the simpler forms, especially
And there is some good news. The 1040 gives
you more opportunities than the other forms to cut your tax bill.
So sharpen your pencils
and let's go. Here's a box-by-box description of Form 1040.
If you received a tax package from the IRS with a peel-off label,
just stick it on here. If any of the information is incorrect, make
the corrections -- clearly -- directly on the label.
If you didn't receive
a tax package, fill in the information requested, including your
first name, middle initial and last name. Joint filers must each
fill in this information. Then add your home address, including
And don't forget your
Social Security number (numbers, for married couples) in the boxes
provided at the upper right-hand corner of the form. Even if you're
married and decided to file separately, you must enter your spouse's
tax ID number underneath yours. And make sure your entry is correct.
The Internal Revenue Service won't process a return that's missing
a Social Security number. That could mean penalty and interest payments
You also get the chance
to give $3 to the Presidential Election Campaign Fund. It doesn't
matter if you (and your spouse) check "Yes or "No."
It won't affect your tax either way.
Now on to filing status. You get five choices, one each on lines
1 through 5: single, married filing jointly, married filing separately,
head of household and qualifying widow or widower with a dependent
Each has specific requirements
and offers different tax advantages. Also, the standard deduction
amount is different, as is the final tax due. So review
your status and pick the one that fits your needs and gives
you the best tax result.
Next, you start whittling away at your impending
tax bill. The exemptions section of the form (line 6 and all its
sublines below) lets the IRS know how many people depend on you
for support. Technically, if you're married filing jointly, your
spouse isn't your dependent. But when you file, each of you is counted
as an exemption, so check boxes 6a and 6b. Later in the filing process,
this will help reduce your taxable income.
Your other dependents
are, in most cases, people who live with you. But there are instances
where you can provide substantial support and claim a person as
a dependent even if they lived elsewhere.
It's important to accurately
dependents so that you get the full benefit of the exemptions.
The IRS also will check to ensure your dependents are valid. To
that end, the agency requires you to enter their names on line 6c,
along with their Social Security numbers and relationships to you.
On the extreme right,
you'll see several lines regarding your dependents. Enter the appropriate
numbers on each line. At line 6d add these up and put the total
in the box. This is the number you'll eventually multiply by $3,050
and subtract to get your taxable income amount.
Now to the main reason the IRS wants a form from you: Just how much
money did you make last year?
To make these monetary
entries a little easier (on you and the tax examiner who'll
be reviewing your return), the IRS allows you to round off cents
to whole dollars. Drop amounts under 50 cents to the last dollar
and increase amounts from .51 to .99 to the next dollar. If you're
rounding off one entry, you must round off all entries.
Most people will enter on line 7 the amount shown in box 1 of the
W-2 wage statement they got from their employers. If you had more
than one job, you should have multiple W-2s. Add them all up and
enter the total here.
If you got other types
of income, such as tips or money for household work you did, that
goes on line 7, too, even if you didn't get an official statement.
Remember: Attach copy
B of all your W-2s here.
On line 8 you report what you earned in interest. The IRS wants
to know about all of it, even if you don't owe taxes on it.
Taxable interest amounts,
generally from bank accounts and similar savings instruments, go
on line 8a. This money usually is reported to you (and the IRS)
in box 1 of the 1099-INT form sent by your financial institution.
If your total exceeds $1,500 then you'll have some more paperwork
to complete: detailing your earnings on part 1 of Schedule
B. But if the interest is less than that, just enter it on line
If you got any tax-exempt
interest, again usually delineated on financial statements, put
that on line 8b. There's no threat of an extra form for this money,
regardless of the amount.
If you received ordinary dividends, you'll get a 1099-DIV showing
the amount. It goes on line 9. If the total is more than $1,500,
or if you received ordinary dividends as a nominee (that is, they
were registered in your name but the actual money belonged to someone
else), you must fill in and attach part 2 of Schedule
Because of tax-law
changes last May, you'll see a new line on the 2003 Form 1040.
The new line 9b is where you'll enter qualified dividends; these
will appear in box 1b on your 1099 statement. Qualified dividends
now are taxed at 15 percent (or 5 percent for taxpayers with lower
incomes). Details on what constitutes a qualified dividend can be
found on page 23 of the Form
You'll also notice that the area on line 9b
where you enter qualified dividends is inset, meaning that this
amount is not included when you total your income in a few more
lines. Don't worry; the IRS will get back to it. You'll have a special
work sheet to account for these earnings and to ensure that you
pay the appropriate, lower tax on them.
Did you get any 1099-G forms? These statements are issued by governments
to report money you received. The most common example is a state
tax refund. If you used your state income tax payments as an itemized
deduction to lower your federal tax bill, any state refund you get
usually is taxable. Enter the amount on line 10.
Divorce has many financial implications, including taxes, for both
parties. If you receive alimony
payments, they are taxable and you need
to enter the amount you received on line 11.
taxpayers, whether it's a main job or a little freelance work
on the side, must report that income (and expenses) on either Schedule
C or C-EZ. The profit reflected on either of those forms is
entered on line 12 of Form 1040. If you recorded a business loss
instead, then put that (in parentheses) on line 12.
gain or (loss)
If you sold a stock, regardless of whether you made or lost money
on it, you have to file Schedule
D. This two-page form can be confusing, but it also can save
you some tax dollars. It allows you to calculate any long-term gains
at a lower tax rate. If you sold an asset at a loss, that bad investment
could help reduce any gains, or even part of your other taxable
income. After you figure your gain or loss on Schedule D, transfer
the final amount from there to your 1040's line 13. Again, put parentheses
around any loss amount.
Investors who received
capital gains distributions from mutual funds but had no other capital
gains transactions to report don't have to worry about Schedule
D. These distributions are reported on the 1099-DIV statements you
get from your fund managers. If this is your situation, simply put
the distributions amount on line 13 and check the small box on that
A bit of a preview here:
If you had capital gains or capital gains distributions, you're
going to have to do a special computation to figure your tax bill
on page 2 of the 1040. But don't be too upset. This extra math is
going to give you a lower tax bill because it will factor in the
gains rate for your earnings.
Those lower rates that affect your dividends
also come into play for any distributions entry you make on the
new line 13b. In this case, earnings received after May 5, 2003,
are taxed at 15 percent instead of 20 percent (or, for lower-income
investors, 5 percent instead of 10 percent). As with qualified dividends,
the amount of your eligible distributions will be tallied on the
separate tax computation worksheet.
gains or (losses)
Line 14 is only for taxpayers who sold or exchanged assets they
used in their trade or business. In this case, you'll also have
to file Form
4797 along with the 1040.
retirement account money
If you took money from an individual retirement arrangement,
you report on line 15. This is from any IRA -- traditional, Roth
or a self-employed IRA plan. This also applies to retirement money
over into another tax-deferred account.
Put the total distribution
(money you took out or rolled over) on 15a and the taxable amount
on 15b. You should have a 1099-R showing the amount distributed
and whether it was taxable or non-taxable.
Similarly, you should have a 1099-R if you received any pension
money. This includes transfers of 401(k) accounts from one employer
to another. The total distribution goes on line 16a, with the taxable
amount on 16b.
You don't have to enter
anything on line 16a if your pension payments are fully taxable.
If your pension or annuity
is partially taxable and your Form 1099-R doesn't show the taxable
part, it's up to you to figure the taxable part. The IRS provides
details on how to do this in Publication
939. Even if your 1099-R shows a taxable amount, it may be to
your advantage to check out this publication as well as the worksheet
on page 26 of the 1040
instructions. The computations may give you a lower taxable
Also, if any tax was
withheld from your pension or IRA, attach the 1099-R forms that
show that amount along with your W-2s.
royalties and other income
Income from the house you rent goes on line 17, after you've
figured the exact amount by completing Schedule
E. Earnings from royalties, partnerships, S corporations or
trusts also are reported on this schedule and 1040 line.
income or (loss)
Farmers must use Schedule
F to report income gained or lost from that operation. Attach
it and put the final amount on line 18.
compensation is subject to tax. If you received these benefits,
you should have received a Form 1099-G. Enter the total on line
Did you reap some of your well-earned federal retirement benefits
last year? Then you should have received a Form SSA-1099. Railroad
retirement benefits treated as Social Security are reported on the
Use these statements
and the worksheet on page 28 of the 1040 instructions to figure
if any of your benefits
are taxable. Report the total distributions on line 20a and
the taxable portion on line 20b.
Line 21 is where you enter any other taxable
income you've not yet told the IRS about. This is not
self-employment earnings. Rather, it includes prizes and awards,
gambling winnings, jury duty fees, Alaska Permanent Fund dividends,
qualified state tuition program earnings and reimbursements or other
amounts received for items deducted in an earlier year. List the
type and amount of income, using a separate sheet if necessary,
and attach it to your return.
But don't get carried
away. Believe it or not, not all income is
taxable. Child support, money or property you inherit or receive
as a gift and life insurance proceeds you receive as a beneficiary
are some of the few items that escape IRS attention.
Want to know exactly how much you got last year from all these
various income sources? So does the IRS. Add lines 7 through 21
and enter the sum of your total income on line 22.
Now let's get to work
cutting that amount!
This next section of
the 1040 allows you to adjust your income by taking several above-the-line
deductions. They get their name because they are listed at the bottom
of page one of the 1040, just above the page's final line (number
34 on the 2003 return) where you enter your adjusted gross income.
By taking all these
deductions you can, you'll cut your adjusted gross income. That,
in turn, cuts your overall bill because figuring your AGI is the
first step in arriving at your final taxable income amount.
Line 23 is a tax break for teachers and other public and private
school employees who spent their own money on classroom materials
and supplies. Up to $250 of qualifying purchases may be claimed
here. If both you and your spouse are teachers, you can claim up
to $500, but only if each of you spent the maximum credit amount.
The next adjustment is for any deductible contributions you
made (or will make by the filing deadline) to a traditional
individual retirement account. On the 2003 return, this could
be up to $6,000 for couples younger than 50 who file jointly, $3,000
per spouse. Older taxpayers can contribute an additional $500 each.
There are income thresholds
that could limit your deduction, especially if you or your spouse
are covered by a retirement plan or 401(k) at work. Use the worksheet
on page 30 of the 1040 instruction booklet to calculate the amount
of your IRA deduction and enter it on line 24.
If you paid interest on a student loan, you may be able to deduct
up to $2,500 of it on line 25. The loan money had to be used to
pay for higher education expenses, including tuition, room and board
and books, for yourself, your spouse or one of your dependents.
To figure the exact amount you can enter here, use the worksheet
on page 31 of the 1040 instruction book.
Tuition and fees
If you continued your education but didn't have to go into debt
to do so, line 26 offers you a way to write off some of your schooling
costs. You can claim here up to $3,000 in eligible tuition and fees.
As with the student loan deduction, there are limits.
And if you claim the Hope or Lifetime
Learning tax credits to pay some school costs for a student named
as a dependent on your return, you cannot use the tuition and fees
adjustment for that same student. Similarly, you can't use this
deduction against expenses you paid with tax-free scholarship, fellowship,
grant, or education savings account funds, such as a Coverdell education
savings account, tax-free savings bond interest or employer-provided
education assistance. Uncle Sam doesn't like taxpayers double-dipping
in the tax-break pool.
The IRS gives taxpayers a break for some moving
expenses, as long as the move is connected with work. Form
3903 details allowable moving expenses. Once you complete it,
enter the amount on line 27 and attach it to your return.
Being your own boss has a lot of appeal. It also means more
tax obligations, including self-employment taxes. But on line 28
you get half of these payments back.
health insurance costs
If, as a self-employed worker, you paid for health insurance
for yourself, your spouse or dependents, you now can deduct 100
percent of those costs on line 29. Use the worksheet on page 33
of the 1040 instruction booklet to figure the amount you can enter
here, especially if at any time you also were eligible for an employer-provided
health care plan.
Retirement accounts are a great way to prepare for your Golden
Years as well as reduce taxes. Self-employed workers have several
options, including Keoghs, simplified employee pensions (SEPs) and
SIMPLE plans. If you contributed to such an account, deduct the
amount on line 30.
savings withdrawal penalty
Uncle Sam can be a softie. Here he gives you a tax break for
doing something that originally got you in trouble. If you took
money from a savings account and had to pay a penalty for that,
you can deduct that fee on line 31. You should get Form 1099-INT
or Form 1099-OID showing just how much you can enter.
It's probably no fun writing
check every month, but on line 32a you can deduct them from your
taxable income. Be sure to enter your ex-spouse's Social Security
number on line 32b, or the IRS could take this deduction away from
The next line, number 33, is a sneaky one. It's not actually
labeled "final adjustments." Rather, it tells you to "add lines
23 through 32a." However, if you read the 1040 instruction book,
you'll find that here is where you can take several specific, although
uncommon, tax breaks ranging from performing arts expenses to jury
duty pay given to your employer.
One tax break included
here is becoming more popular: a deduction for clean-fuel
vehicles. Check out the full list on page 33 to see if you qualify
for any of these breaks. Once you've totaled them, enter the amount
here. Also be sure to write on the dotted line exactly which additional
deductions you took.
Contributions to Archer medical savings accounts, named after
former Congressman Bill Archer, also are allowed here. These plans
are provided to employees of some small businesses, as well as used
by some self-employed workers. Use Form
8853 to figure the amount to enter here, and be sure to attach
the completed form to your tax return before you send it to the
new this year, National Guard and Reservists who travel overnight
for training also can deduct travel and lodging costs on line 33.
It's now time for adjustments payoff with line 34. Subtract
line 33 from line 22 and enter the amount here. This is your adjusted
As we turn to page two of
the 1040, we get to whittle away at your AGI en route to your taxable
income. Re-enter your AGI from the front page on line 35.
and blind deductions
Taxpayers who are 65 or older or
visually impaired of any age need to pay
special attention to line 36a. The boxes here could allow you to
your standard deduction. Just
how much can be found on page 35 of the instructions booklet. For
couples who file jointly, there are boxes for each spouse. And don't
forget to enter the number of the smaller boxes you check in the
larger box to the right.
Married but filing apart
If you're one of the small group of taxpayers who is married
but you and your spouse file separately, don't overlook line
36b. Since you're filing the long form, it's likely you'll both
be itemizing deductions. But if your spouse is doing so on a separate
return, check this box. The IRS wants to know so it can check that
you both aren't claiming the same write-offs.
On line 37 you enter either your standard
deduction amount or the deductions you itemized on Schedule
A. The standard amounts allowed for each filing status are listed
on the left side of the form, or in the instruction book for filers
who checked boxes on line 37a.
Be sure the deduction
method you choose is the most tax advantageous. Deductions help
you get to the lowest possible taxable income amount, so pick the
larger amount. If you're 70 and blind
but itemizing provides you with more deductions than the increased
standard amount, then itemize.
After you've entered
your deductions (line
37), subtract them from your AGI
(line 35) and put the amount on line 38.
Now we go back to page one and those dependents you can claim as
tax exemptions. Take the number you placed on line 6d and multiply
it by $3,050. This dollar amount goes on line 40.
may not be able to get the full benefit of their exemptions. You'll
see a notation that if your AGI is more than $104,625 you'll have
to complete the worksheet on page 35 to see how much your exemptions
Subtract your exemption amount (line 39) from your income total
(line 38). This is your taxable income, the amount that the IRS
uses to compute precisely what you owe, and it goes on line 40.
If your deductions are
more than your income, then you have no taxable income and enter
zero on line 40. Lucky you, no tax due!
But don't stop. If you
had taxes withheld, you must file a return to get that money back.
And if you're eligible for any tax credits, coming up in just a
few lines, you could get an even bigger refund.
Most of us, however, will enter a taxable income amount, so now
we go to the heart of this process: determining what is owed the
IRS. That amount goes on line 41. But as is generally the case when
it comes to taxes, figuring your bill isn't a one-size-fits-all
- If your taxable income
is $100,000 or less, you can use the Tax Tables that begin on
page 62 of the 1040 instruction booklet to see what you owe.
- If you made more
than that, you'll have to use the Tax Rate Schedules (page 74)
you detailed capital gains on Schedule D, you'll have to complete
part IV of that attachment to see what you owe.
- And if
your only capital gains were distributions you put directly on
lines 13a or 13b of your 1040, use the worksheet on page 37 of
the 1040 instruction booklet to compute your tax bill.
Parents who filled out
Form 8814 to report a child's investment income or taxpayers who
needed Form 4972 to detail a retirement plan lump-sump distribution
must put the amount of tax figured on these forms on line 41, too.
minimum tax (AMT)
Just when you thought it was safe, here comes the alternative
minimum tax on line 42.
The AMT is a separate
tax computation with its own rates that could boost your tax bill
if you claim a lot of exemptions or deductions on your regular tax
worksheet on page 38 of the 1040 instructions will help you determine
if you are hit by the alternative tax. If so, you'll also have to
fill out Form 6251 and put the amount on line 42. Then add your
regular tax due on line 41 and the alternative amount on line 42
and put that total number on line 43.
If you're lucky, you escaped
the alternative tax. Either way, alternative or regular tax, the
next group of 1040 lines may provide just what the tax doctor ordered
-- credits. Tax credits are subtracted directly from any tax you
owe, immediately and often dramatically reducing your tax bill.
You can take the foreign tax credit on line 44 if you paid any taxes
to another country. This is most common for investors who have international
mutual funds. The amount of foreign tax paid on these investments
is reported on the 1099-DIV you got from your investment manager.
Foreign taxes of $300
or less ($600 for couples filing jointly) can be entered directly
on this line. For larger foreign tax bills, you'll have to fill
out and attach Form 1116. A word of warning: The 1116 is a complicated
piece of paper.
and dependent care credit
You may be able use line 45 if you paid someone to care
for your child or other dependent who couldn't care for himself
or herself. The key requirement for this tax credit is that the
care was necessary so you could work or look for work. If you're
eligible for the child and dependent care credit, you'll also need
to fill out and attach Form 2441.
or disabled tax credit
Line 46 provides a tax break for filers who are older than 65 or
who retired on permanent and total disability and received taxable
disability income. This credit is not allowed if your AGI exceeds
certain limits for your filing status. If this credit might affect
you, check out the 1040 instructions for allowable income amounts.
You'll also have to file Schedule R with your return.
There are two education credits that could save you tax money. You
enter them on line 47.
The Hope Credit helps
pay for expenses during a student's first two years of college and
could shave $1,500 per student off your tax bill. The Lifetime Learning
Credit can be used for undergraduate, graduate and professional
degree courses for anyone and offers a maximum annual $2,000 savings.
You can claim both in the same year, but not for the same expenses.
Form 8863 details both these credits.
And if you claimed the
tuition and fees deduction for a dependent student, you aren't allowed
to take either credit for the same student.
savings contributions credit on line 48 is a tax break designed
to reward lower-wage earners who contribute to retirement accounts.
An eligible filer could use the credit to reduce his tax bill by
as much as $1,000. The actual tax break depends upon a worker's
income, filing status and just how much he puts into a retirement
plan. Basically, the lower the income, the bigger the credit.
Of course, any offer
of a smaller tax bill generally involves a bit more work on the
taxpayer's part. To see if you can claim the saver's credit, check
out page 39 of the instruction book. If you're eligible, you'll
need to complete Form 8880 to determine the amount to enter.
tax credit, claimed on line 49, can cut your tax bill by $1,000
per child. There are certain eligibility tests both your and your
child must meet and a worksheet to complete before you can claim
this credit. Pages 40 and 41 of the 1040 instructions contain details
and the worksheet.
The worksheet is especially
important this filing season for the nearly 24 million parents who
got an advance payment of this credit last year. These filers have
a little more work to do on their 2003 returns. The child tax credit
amount you can claim on your Form 1040 must be reduced by your advance
payment amount. So if you got a $400 advance payment last year,
you can only claim $600 on your return this year. You're not being
shorted: Your total credit still is $1,000 -- you just got it in
two payments, once in the early check and again on your return.
Be sure you do the proper
math here. The IRS knows who got these payments and since a similar
early tax refund caused massive filing confusion a few years ago,
the agency is keeping a close eye on this tax-return section.
If you became Junior's proud parent thanks to adoption,
up to $10,160 of those costs may be credited on line 50. Complete
8839 to figure just how much you can claim here.
Lines 51 and 52 allow you to claim several other, less common, tax
credits. They include:
interest credit associated with a state or local mortgage credit
certificate. This is not the same as the mortgage interest deduction
you can claim on Schedule A. Form
8396 details this credit. Be sure to check box 51a if it applies
First-time home buyer credit for District of Columbia residents.
Check box 51b and complete Form
- General business
credit. Check box 52a and file Form
year minimum tax payment. If you paid this extra tax previously,
you may be able to get some of it back here. Complete Form
8801 and check box 52b.
- Any other forms
for a tax credit, such as Form
8834 for a qualified electric vehicle credit or Form
8844 for an empowerment zone employment credit. Check box
52c if these are applicable and note the credit you are claiming.
Now add up all the credits you qualified for -- lines 44 through
52 -- and enter the sum on line 53. This number represents your
total nonrefundable credits, meaning these credits can get your
bill down to nothing. (If they total more than your owe, the excess
credit is of no use to you.)
Then subtract line 53
(total credits) from line 43 (regular tax and AMT due) and enter
the amount on line 54. If your credits are greater than the tax
you owe, enter zero here.
If the amount is zero or small, hold the celebration for a few minutes.
What the IRS gives, it also (and more frequently) takes. The next
section of Form 1040 is "Other Taxes."
Taxpayers who worked for themselves, either as their full-time job
or as a side endeavor to make a little extra money, must pay self-employment
tax toward Social Security and Medicare. The amount is figured on
Schedule SE and entered on line 55 of the 1040.
If you received tips of $20 or more in any month last year and didn't
report the full amount to your employer, you must pay the Social
Security and Medicare or railroad retirement tax on it here on line
56. To figure the tax, use Form
plan, IRA and medical savings account taxes
Line 57 is where you enter any tax you owe on the early distribution
of an IRA or other tax-deferred retirement account. You also would
owe tax here on excess contributions to an IRA or medical savings
account (MSA). Some older taxpayers who didn't take minimum distributions
from their retirement plans also may owe tax here. To determine
just how much, complete Form
earned income credit payments
income credit provides a tax break for people
who work, but don't earn a lot. The EIC could further reduce your
tax bill and even get you a refund if you owe no tax. It's available
for all qualifying low-income workers, but pays more to those with
some cases, eligible workers get the credit money as advance payments
from their companies. Those payments will be shown in box 9 of the
W-2 and must be entered on line 58.
If you paid
a household employee $1,400 or more last year, you must pay
Social Security and Medicare taxes for that employee. Fill out Schedule
H and put the amount you owe on your 1040's line 59.
Add lines 54 through 59 to find your total tax amount. This number
goes on line 60.
Now we get to see how
much of that amount you've already paid.
This is the most common tax payment. Almost everyone who has a job
sees a big chunk of cash subtracted from each paycheck to send to
Uncle Sam. That federal withholding is reported on your W-2. It
also can be found on various 1099 forms that detail other income
you earned. Total them all and put the amount on line 61.
If you made estimated
tax payments last year, that total goes on line 62. You also
enter here any overpayment from your 2002 return that you applied
to your 2003 estimated tax bill.
Low-income workers who didn't get advance payments of the earned
income credit through their pay should explore whether they can
claim it here. Eligibility guidelines, worksheets and EIC tax credit
tables begin on page 44 of the 1040 instructions. When you figure
how much you can claim, enter the amount on line 63.
Social Security taxes
If you (or your spouse if you file a joint return) had more than
one employer and your combined income last year was more than $87,000
last year, too
much Social Security tax may have been withheld from your paychecks.
You can get back the amount over $5,394 that was withheld from you
by noting the excess on line 64. Some railroad
workers could be in similar straits. Line 64 is for this excess
railroad tax, too.
child tax credit
You may be able to get even more of a tax break for your kids through
child tax credit on line 65. Like the earlier child tax credit,
you have to meet eligibility standards. And you must take the child
tax credit first (line 49). Complete Form
8812 to claim the additional credit, which could give you a
refund even if you don't owe any tax.
paid with extension request
If you requested an extension
to file your return, you had to estimate your tax bill and pay
it with that request. Enter that amount on line 66, regardless of
whether you paid by credit
card, check or money order. If you did use your credit card,
do not include the convenience fee you were charged as part of your
tax payment. That went to the private company handling the transaction,
not Uncle Sam.
Line 67 allows some taxpayers to account for two other types of
tax payments and a credit. They are related to three very specific
- Undistributed capital
gains from a regulated investment company or real estate investment
trust. You should have received a Form 2439 that will show any
taxes paid by the investments.
- Federal excise tax
paid on fuels sold or used for nontaxable uses, such as for farming
equipment or a commercial fishing boat. A full explanation of
the eligible nontaxable fuel uses is contained in Form
4136, which must be filed to claim this credit.
health insurance credit for filers who received Trade Assistance
Adjustment (TAA) or Pension Benefit Guaranty Corporation (PBGC)
payments. Details are found on Form
of these are claimed on line 67.
to check which form you used to arrive at the total entered there.
Almost done. Add lines 61 through 67. The sum goes on line 68 as
the total tax you've already paid.
If line 68 is more than line 60 (total tax due), you are going to
get some cash back. Subtract line 60 from 68 and enter your overpayment
amount on line 69.
As silly as it seems, line 70a asks the amount of your overpayment
you want refunded to you. Most of us want it all. If you don't,
decide how much you do want now and enter it here.
If you want your refund
to go directly to a bank account, fill in the routing number on
line 70b. If you have any questions about the nine digits to enter
here, contact your financial institution.
Line 70c lets the IRS know if it's a checking or savings account.
forget to enter your full account number, which can be up to 17
letters and numbers, on line 70d. If you're copying the number from
a check, be careful not to include the check number here.
applied to estimated taxes
If you are among the few who doesn't want a full refund, you have
the option to apply part or all of your refund toward 2004 estimated
tax payments. That amount goes on line 71. Be sure this is what
you want to do. Once you tell the IRS to use the money toward estimated
taxes, you can't change your mind and get a full refund.
If you had to skip the three lines discussed above, it's because
line 60 is larger than line 68. Sorry. That means you have a tax
bill due. Subtract line 68 from line 60 and enter the amount you
owe on line 72.
You also might owe a
penalty if you owe at least $1,000 and the amount due is more than
10 percent of your total tax due. A penalty could also be assessed
if you didn't make timely estimated tax payments. Complete Form
2210 to find out if you owe the penalty. If so, enter the penalty
on line 73, and don't forget to add it to your taxes due amount
on the line above.
Because Form 2210 is
complicated, you can leave line 73 blank and the IRS will figure
any penalty and send you a bill. You won't be charged interest on
the penalty if you pay by the date specified on the bill.
When you've figured
your final tax bill and want to pay by check or money order, make
it out to the United States Treasury, not the IRS.
Third party designee
Hang on. We're heading down the home stretch. This section of the
1040 allows you to name
someone else to handle any questions about your return.
By checking the "yes" box here, you allow the
IRS to contact your tax pro, your mom, your cousin the CPA or anyone
else you want to solve problems related to your return. Details
on naming a designated tax representative can be found on page 58
of the form's instructions
Finally, whether you're getting a refund or paying Uncle Sam, you've
reached the end of the 1040.
Sign your name and write
in the date, your occupation and your daytime telephone number.
If you're filing a joint return, your spouse must sign and provide
the same information as well.
Since you've read this
far, we're going to assume you're doing your taxes yourself, so
you don't need to worry about the paid preparer's signature block.
But folks who did turn their taxes over to a professional should
have noticed a new box this year on the 1040. Just under your phone
number, you can give the IRS permission to go directly to your tax
preparer if the agency has any questions about your return. The
goal is to shorten the time it takes to get tax problems solved.
Now, gather all your
supporting attachments and forms, assembling them in order of their
"Attachment Sequence No." shown in the upper right corner
of each and attach them to your 1040.
Also attach the first
copy or Copy B of your various W-2 and, if tax was withheld, your
Enclose your payment
with your return, but don't attach the check or money order to the
Make sure you have the
correct envelope that came with your tax package. One is designated
for returns getting a refund, the other for those paying tax. Then
check your 1040 one more time, seal the envelope and head to
the post office to get it on its way by April 15.
Tax mission accomplished!
Michele Erbrick assisted with this
-- Updated: Feb. 6, 2004