Form 1040: U.S. Individual Tax Return

What Is Form 1040: U.S. Individual Tax Return?

Form 1040 is the standard Internal Revenue Service (IRS) form that individual taxpayers use to file their annual income tax returns. The form contains sections that require taxpayers to disclose their taxable income for the year to determine whether additional taxes are owed or whether the filer will receive a tax refund.

Key Takeaways

  • Form 1040 is what individual taxpayers use to file their taxes with the IRS.
  • The form determines if additional taxes are due or if the filer will receive a tax refund.
  • Personal information, such as name, address, Social Security number, and the number of dependents, are asked for on Form 1040.
  • A filer also needs to report wages, salary, taxable interest, capital gains, pensions, Social Security benefits, and other types of income.
  • Taxpayers may need to file supplemental tax 1040 forms depending on their situation.

Understanding Form 1040

Form 1040 needs to be filed with the IRS by April 15 in most years. Everyone who earns income over a certain threshold must file an income tax return with the IRS (businesses have different forms to report their profits).

The IRS overhauled the 1040 form for the 2018 tax year after passage of the Tax Cuts and Jobs Act (TCJA), and it examined, according to the agency, "ways to improve the 1040 filing experience." The new, shorter 1040 was billed as easing communication of future tax-law changes and reducing the number of 1040s from which taxpayers must choose. The new 1040 form includes two pages to fill out which are available on the IRS website. Form 1040 can be mailed in or e-filed.

Form 1040 prompts tax filers for information on their filing status, such as name, address, Social Security number (some information on one's spouse may also be needed), and the number of dependents. The form also asks about full-year health coverage and whether the taxpayer wishes to contribute $3 to presidential campaign funds.

Form 1040

The 1040 income section asks the filer to report wages, salary, taxable interest, capital gains, pensions, Social Security benefits, and other types of income. The new tax legislation eliminated many deductions, including for unreimbursed employee expenses, tax-preparation fees, and moving for a job (except for military on active duty).

The new 1040 uses what the IRS terms a "building block" approach and allows taxpayers to add only the schedules they need to their tax return. Some individuals may now need to file one or more of six new supplemental schedules with their 1040 in addition to long-standing schedules for such items as business income or loss, depending on whether they're claiming tax credits or owe additional taxes. Many individual taxpayers, however, only need to file a 1040 and no schedules.

Types of Form 1040

Taxpayers in certain situations may need to file a different variant of the 1040 form instead of the standard version. Below are the options.

Form 1040-NR

A variety of nonresident aliens or their representatives need to file this form:

  • Those who are engaged in trade or business in the United States
  • Representatives of a deceased person who would have had to file a Form 1040-NR
  • Those who represent an estate or trust that had to file a 1040-NR

Form 1040NR-EZ has been replaced with Form 1040-NR.

As well, the IRS also produces the 1040-SS and 1040-PR. The 1040-SS is for residents of American Samoa, the CNMI, Guam, Puerto Rico, or the U.S. Virgin Islands who have net self-employment income and do not have to file Form 1040 with the U.S. Form 1040-PR is the Spanish-language equivalent of Form 1040-SS.

Form 1040-ES

This form is used to figure and pay estimated quarterly taxes. The estimated tax applies to income that isn’t subject to withholding, which includes earnings from self-employment, interest, dividends, and rents. This may also include unemployment compensation, pension income, and the taxable portion of Social Security benefits.

Form 1040-V

This is a statement accompanying a taxpayer's payment for any balance on the "Amount you owe" line of the 1040 or 1040-NR.

Form 1040-X

If a filer makes a mistake or forgets to include information on any 1040 form, Form 1040-X is used for making changes to previously filed 1040s.

Form 1040-SR

The IRS introduced a new 1040 form for seniors in 2019, Form 1040-SR. Changes include a larger font, no shading (shaded sections can be hard to read), and a standard deduction chart that includes the extra standard deduction for seniors. Seniors who fill out their taxes online won't notice the difference, but those who do it on paper should benefit.

Standard Deductions on Form 1040

The 1040 income section asks taxpayers for their filing status. This filing determines the taxpayer's standard deduction. New, higher standard deduction introduced with the Tax and Job Cuts Act. For the tax year 2021, which will be filed in 2022, the numbers are as follows:

  • Single or married filing separately, $12,550
  • Married filing jointly or a qualifying widow(er), $25,100
  • Head of household, $18,800

An additional deduction may be taken by those who are age 65 or older or blind (see "Age/Blindness" on the first page of Form 1040):

  • Single and not widowed, $1,700
  • Married filing jointly, $1,350 for each spouse who is 65 or older or blind.

For tax year 2022 (to be filed in 2023), these deductions are as follows:

  • Single or married filing separately, $12,950
  • Married filing jointly or a qualifying widow(er), $25,900
  • Head of household, $19,400

The standard deduction cannot be taken by an estate or trust, an individual who is filing a short return due to a change in accounting periods, an individual who was a nonresident alien part of the tax year, or a married individual whose spouse is filing separately and itemizing.

Additional Schedules

The new 1040 uses a variety of additional schedules to help the taxpayer report their tax obligation. The following schedules are used to compile financial information away from Form 1040 to later use Form 1040 as the primary source of reporting.

Schedule 1

Schedule 1 is used to report additional income or adjustments to income. This may include alimony, disposition proceeds from the sale of a business, educator expenses, HSA contributions, or unemployment compensation. 'Other Income' from Schedule 1 is reported on Line 8 of Form 1040, while 'Adjustments to Income' from Schedule 1 is reported on Line 10 of Form 1040.

Schedule 2

Schedule 2 is used to report additional taxes. One part of Schedule 2 reports alternative minimum tax and repayment of excess premium tax credits for insurance bought through health insurance marketplaces. Another part of Schedule 2 is used to report self-employment taxes, Medicare tax, tax on IRAs, household employment taxes, and other taxes. These two parts from Schedule 2 are reported on Line 17 and line 23 on Form 1040.

Schedule 3

Schedule 3 is used to report additional tax credits and payments. These credits include dependent care expense credits, residential energy credits, excess social security taxes previously remit, and excess Federal income taxes previously remit. Nonrefundable credits from Schedule 3 are reported on Line 20 of Form 1040, while refundable credits from Schedule 3 are reported on Line 31 of Form 1040.

Schedule A (Itemized Deductions)

Schedule A is used to figure out a taxpayer's itemized deduction. A taxpayer's federal income liability is most often minimized when choosing the larger of their standard deduction or itemized deduction. The itemized deduction calculation includes medical expenses, dental expenses, certain taxes, certain interest assessments, theft losses, and other expenses. Any input from Schedule A is entered into Line 12a on Form 1040.

Schedule B (Interest and Ordinary Dividends

Schedule B is used for taxpayers who received greater than $1,500 of taxable interest or ordinary dividends. It is also used to report interest from a seller-financed mortgage, accrued interest from a bond, interest or ordinary dividends as a nominee, and other similar types of interest. Input from Schedule B is entered into Line 2b and Line 3b on Form 1040.

Schedule C (Net Profit From Business)

Schedule C is used to report business income or loss. An activity qualifies as a business if the taxpayer is engaged in the activity for the primary purpose of producing income or profit. The activity is also considered a business as long as the taxpayer is involved in the activity with regularity and continuity. Profit from Schedule C is entered on Schedule 1, Line 3. It also used on Schedule SE.

If your business was a sole proprietorship or qualified join venture and you meet other criteria, you can report your business operations using Schedule C-EZ, a simplified schedule compared to Schedule C.

Schedule D (Capital Gains and Losses)

Schedule D is used to report taxable income from the sale or exchange of a capital asset. This gain may have arisen from an exchange or an involuntary conversion. Schedule D is also used to report capital gain distributions not otherwise reported on Form 1040 as well as nonbusiness bad debts. Input from Schedule D is entered on Form 1040, Line 7.

Schedule E (Supplemental Income and Loss)

Schedule E is used to report various types of additional income or losses. This supplemental financial activity ranges from real estate rental income, royalties, partnerships, estates, trusts, and residual interests in real estate mortgage investment conduits. Supplemental income figures from Schedule E are reported on Form 1040 on Line 5.

Schedule EIC (Earned Income Credit)

Schedule EIC is quite different from other tax schedules. The earned income credit (EIC) is calculated separately from this schedule. However, Schedule EIC is used to substantiate the qualification of your qualifying children by remitting to the IRS your child's name, Social Security number, birth year, relationship to you, and residency status. Information from Schedule EIC is not directly input into Form 1040.

The Earned Income Credit is maximized if a taxpayer has at least three children. Therefore, Schedule EIC only asks for information on three children; additional forms for additional children beyond three is not required.

Other Schedules

Other notable supplementary schedules to Form 1040 include:

  • Schedule F is used to report profit or losses from farming operations.
  • Schedule H is used to report household employment taxes if you paid cash wages to household employees and those wages were subject to various Federal taxes.
  • Schedule J is used to report farming or fishing trade income by averaging taxable income over the previous three years.
  • Schedule R is used to report a credit for the elderly or disabled.
  • Schedule SE is used to report the tax due on net earnings from self-employment.
  • Schedule 8812 is used to report potentially refundable credits for qualifying children (or other dependents).

Who Needs to File Form 1040

Broadly speaking, if a United States citizen wants to or needs to file a Federal income tax return, they need to file Form 1040 or a variation of Form 1040 mentioned above. There are three general conditions to consider regarding whether an individual needs to file.

First, the IRS requires individuals with gross income of certain levels to file taxes. This gross income threshold varies based on the individual's filing status and age. The table below lists the income limits for individuals under 65 years old; older tax payers will have higher thresholds, and the threshold changes if neither, one, or both individuals in a marriage are 65 or older.

2021 Gross Income Thresholds
 Filing Status Gross Income
Single $12,550
Married Filing Jointly $25,100
Married Filing Separately $5
Head of Household $18,800
Qualifying Widow(er) $25,100
Individuals having earned the gross income amounts below were required to file 2021 Federal income taxes.

Second, children and dependents may not be required to file if they can be claimed as a dependent. If the dependent's unearned income greater than $1,100, earned income was greater than $12,550, or gross income meets certain thresholds, the dependent must file their own Form 1040. These rules are slightly different for single dependents as opposed to dependents who are married.

Last, there are some specific situations that require an individual to file Form 1040. Regardless of their income or dependency status, some of those situations include but are not limited to:

  • You owe additional special taxes such as alternative minimum tax.
  • You receive HSA or other health account distributions.
  • You had net earning from self-employment of at least $400.
  • You met income threshold limits for wages earned from a church.

What Is Form 1040 Used for?

Form 1040 is the primary tax form used by U.S. taxpayers to file their annual income tax returns. Taxpayers input their personal information and tax information onto the form, then submit the form to the IRS for review.

Is Form 1040 the Same As a W-2?

Form 1040 is different than a W-2. A W-2 is a wage and tax statement an employee receives from a company they worked for during the tax year. The information listed on the W-2 is used to fill out Form 1040.

Where Can I Find Form 1040?

Form 1040 is not a tax statement or form that gets distributed to taxpayers. Unlike a W-2 or 1099 statement that is mailed by an employer or party you've contracted with, Form 1040 is available for download on the IRS website. In addition, free IRS filing platforms such as Free File Fillable Forms will provide digital copies. Last, some public courthouses or Federal buildings in your community may offer paper copies available for pick-up.

What Is the Difference Between a 1040 and 1099?

Form 1040 and Form 1099 are different components to an individual's tax return. There are many different types of Form 1099, but Form 1099 is most commonly given to independent contractors to remit tax information relating to payments they received during the tax year. This information is used to complete Form 1040, as the financial records listed on Form 1099 are input into Form 1040.

The Bottom Line

Form 1040 is the central part of tax filing for United States citizens. It is the tax form that all taxpayer financial statements eventually feed into and supporting tax schedules branch out of. Regardless of an individual's filing status or income, taxpayers who file taxes will complete some version of Form 1040.

Article Sources
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