What is Form 1040 and Why is it So Popular?

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Form 1040 is one of the most commonly filed tax forms in the United States. It is important to understand, however, that there are actually several different version of Form 1040, and you will need to fill out the form that is specific to your situation. This form allows you to list your gross income, to claim expenses and credits, and to itemize deductions, among other things. Form 1040 is wildly popular for several reasons. First of all, it is the “average person’s” form, and the vast majority of people meet criteria that determines it is the form they should fill out. Secondly, Form 1040 is actually quite beneficial when filled out correctly and carefully. Out of all the tax forms available, it has the most possibility for lowering a person’s taxes.

Even though everyone would like to have the benefits offered by Form 1040, not everyone will be eligible to fill out the form. On the other hand, many people will have to fill out the form. Those who earn a taxable income of $100,000, who have earned over $400 from self-employment, and/or who have had income tax payments withheld from their regular check must fill out Form 1040. Others who must use this form include those who owe special taxes, those who have paid estimated tax payments, those who have been overpaid, foreign wage earners or foreign taxpayers, those claiming tax treaty benefits, those with itemized deductions, those claiming income adjustments, those who received advanced Earned Income Tax Credit payments, those with uncollected tax, those with a code Z on their W-2 forms, and those who have filed for Chapter 11 bankruptcy. More individuals who are required to use this form include those who sell property or mutual funds and those who earn money from S-corporations or rentals, to name a few.

Filling out Form 1040 is fairly straightforward, and most people are capable of doing it on their own. If, however, you do not understand something on the form or just do not feel confident about filling it out yourself, you should always seek professional advice and/or hire someone experienced to take care of filing for you. When you do fill out your form, whether you are doing it yourself or working with a preparer, there are certain pieces of documentation you will need to have. These include a driver’s license or identification card, your social security number and the social security numbers of all relevant parties, your birth date and the birth date of all relevant parties, proof of tax credits or deductions, proof of tax exclusions, statements of interest if applicable, and your statement of wages and your tax return from the previous year. It is also wise to know your filing status ahead of time, something you can easily determine with a little research. However, if you are working with a preparer, he or she should be able to help you determine your status. Also, if you wish to have any refunds deposited directly into your bank account, you will need to have all of your relevant bank information handy.


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