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Today we're going to talk about the 1040.
The first time I saw a 1040,
I thought, why are there so many lines
and why is it so confusing?
And I'm sure I'm not alone in this feeling
because a lot of people have this question
about what is a 1040 tax form?
So all of the information that we've discussed
in previous episodes, this is the culmination
of all of that information.
And so all of your W-2s that you've received
for the year, or any 1099s,
all of that information will end up on your form 1040.
It actually has a major impact and could be the difference
between you getting a refund or you owing,
and so you want to make sure that you fill it out right.
To help you better understand a 1040
and how to fill it out correctly,
we have our team of tax experts.
But first, a question from Hannah.
Hi, my name is Hannah.
I went to the IRS website
to download the return form
and was overwhelmed with all the information
I needed to fill out. Help.
Hannah, we got you, girl.
So let's dive right in. What do you have for her?
The 1040 is a form that's required by the US government
that will identify all of your wages
that have been earned for the year
and help you calculate what your tax liability is
and if you are owed money from the federal government
or if you owe money back to the federal government.
The form 1040 is applicable to all US taxpayers.
Whether or not you will be filling it out yourself
is determined whether or not you will be using a tax preparer.
If you are using a system to help you prepare your taxes,
you do still have to fill this out.
It's just housed within the software.
Starting from the top, you will fill out
your filing status for the year.
You will then move on to providing your basic information
which will include your full legal name,
your Social Security Number, and your home address.
Then you will identify whether or not
you will be taking the standard deduction
or if you'll be itemizing those deductions.
You will then also provide information
about any dependents that you may have,
whether a qualifying child or a qualifying relative,
and provide some basic information.
You will then fill out and capture
all of your wages for the year.
This will include any tips that you received,
bonus, grants, commissions,
every dollar that you've received
from your employer or employers.
Then there's a myriad of questions
that are very specific to your individual tax situation.
So whether or not you have any IRA distributions,
any pension distributions,
those are very specific to your particular tax situation.
Once you've captured every dollar,
this is referred to as your total income.
Once you have calculated your total income,
if there's any adjustments to that total income,
that is then referred to as your AGI,
your Adjusted Gross Income.
Once you have identified your Adjusted Gross Income,
you will then identify whether or not
you will be applying the standard deduction
or if you choose to itemize your deductions.
This then results in what is considered
your taxable income for the year
and how your tax liability
will be calculated going forward.
So once you have identified
your taxable income for the year,
you then will move on to the section labeled credits.
This is where you will apply any credits
that are applicable to your individual tax situation.
From there you will then know and be able to calculate
whether or not the government owes you money
or you owe the government back.
I'm so impressed by Lauren's explanation of the 1040.
Such a simple and concise way
to understand what this tax form is all about.
Tonya, do you have anything for Hannah?
Yeah, I filed my taxes for the first time by myself
when I was, like, 17 years old.
Oh, my gosh, you're so impressive.
Oh, my gosh. I'm not. I'm not.
Right now there's tax software, there's websites and so forth
that really help kind of hold your hand through the process.
And that's what I found instrumental and really helpful.
It's like, okay, maybe the question on this form,
maybe you don't understand it in this manner.
But the software asks you the question,
we're like, "Yo, yeah, I want to do that."
Or, "No, I don't want to do that."
Or, "Yeah, I did this. I didn't do this."
- Mm-hmm. - But also understand,
you know, if you have a more complex situation,
maybe it's not for you to file it yourself.
Mine was very simple. I didn't have any children.
I didn't have a home.
Like-- well, I was not homeless.
I lived at home with my parents.
But I wasn't claiming a home or anything of that nature.
I hadn't gone to college, so I didn't have interest
from my student loan payments or anything of that nature.
So it was really straightforward
and it made sense for me at that time.
But if your taxes aren't straightforward
and you're concerned that you're going to mess something up,
that's the reason there are experts there.
So ask questions or reach out to an expert
if you feel like it's a little out of your hands
or if you get to a point when using a software
that you're like, "You know what?
I don't trust myself with this."
Let me ask for additional help.
I still can't get over
Lauren's explanation about the 1040.
Wow. Very impressive.
Stay tuned for the next one
all about tax deadlines and extensions.