“Form 1040….” Gulp. The name alone can strike fear in your heart. Well, at least dread. But what is it really? It’s merely a tool for you, a way to figure out specific pieces of information. More specifically, the way to confirm with the IRS:
- Who you are, where you live, what you do
- How many dependents you have
- How much money you made, and if any tax was withheld
- If you have any deductions or tax credits
So, the (literal) Bottom Line of the Form 1040 is not information to be feared. It’s your chance to make sure that all the info that’s been collected about you is accurate, plus it allows you to claim any deductions and tax credits you deserve. It also gives you a heads-up on any REFUND coming to you, or any TAX DUE. Remember the old adage ‘knowledge is power?’ Believe it, come Tax Time.
Remember the ‘Tax Mail’ that you collected and organized? (You did that, right? If not, see: ”Tax Preparation Tips”). Those stacks you made will help you tackle the Big Important Questions:
- The first section of the 1040 is Information about you – your name, where you live, dependents.
- The Income section is next: that’s where your W-2 form comes in, line 7. Ahem, note that after line 7, there are 17 more lines – yep, 17 – asking you to report other kinds of income. That’s where some of the other Tax Mail you’ve received, saved, and organized will come in handy. You’ll need the forms for types of income such as: Dividends, Alimony, Capital Gains, Distributions from things like IRA, Pensions and Annuities, Rental or Farm income, Unemployment and Social Security…and the list goes on. That’s why having a Tax Professional take that information and complete your form can be a life-saver! It’s also why you are now proud of yourself for keeping all that Tax Mail organized.
If you’re doing the adding-up for yourself at this point, you may be saying to yourself ‘Really? I made that much money? Oh nooooooo!” But don’t panic, in the next blog we’ll walk you through the fun part – Deductions that allow you to Adjust (as in, make lower) that Total Income number.
PS –– for more info contact Litchfield County tax attorney Martha Miller at 860-435-4666.