This article provides a brief overview of the most common federal income tax forms individuals will use when completing a tax return. This includes the three versions of Form 1040, as well as Schedules A and B.
Anyone looking for a more comprehensive list of IRS forms can find one in our article: Federal Income Tax Forms, which contains links to nearly 100 different PDFs published by the IRS. Those forms are grouped into categories, making the various documents easier to locate.
The Form 1040, also known as the U.S. Individual Income Tax Return, is perhaps the single most important document published by the IRS. Nearly all of the publications discussed later on provide backup calculations or worksheets that feed into the 1040.
The IRS makes available to taxpayers three different versions of this document, depending on the complexity of the return. One of the three 1040s is known as the "long form" because it's the most comprehensive of the three. The IRS tries to make the tax return preparation process as easy as possible by allowing individuals to complete the shortest form needed to capture a complete set of data.
The simplest versions of this tax form are the 1040EZ and 1040A. These forms are abbreviated versions of the long form. They're designed for individuals that make less than $100,000, and don't have a lot of tax deductions. The following paragraphs provide a more detailed guide to choosing the right Form 1040.
Individuals that need to file a more complex tax form must file Form 1040, the long form.
Schedule A is used to determine a taxpayer's total itemized deductions, which lower the filer's total tax liability, or tax bill.
Each taxpayer is allowed standard deductions as determine by the IRS code. If a taxpayer can "beat" these standard deductions using Schedule A, they are allowed to take the higher deduction. The following table contains the standard deductions for the tax years 2019 and 2020:
|Married Filing Jointly||$24,800||$25,100|
|Married Filing Separately||$12,400||$12,550|
|Head of Household||$18,650||$18,800|
The following are the most common types of deductions appearing on Schedule A.
These are the total medical and dental related expenses, subject to a 7.5% threshold. This means only costs in excess of 7.5% of a taxpayer's Adjusted Gross Income can be deducted.
This deduction includes taxes paid to other jurisdictions or authorities such as state and local income taxes, property, and real estate taxes. Most federal taxpayers also pay state income taxes, and that deduction is taken on Schedule A. Homeowners that paid property taxes directly should keep a record of those payments. If taxes are collected by a mortgage company and sent to local authorities, those payments will be reported on Form 1098.
Homeowners that have a mortgage can deduct the interest expense associated with their monthly payments. Mortgage companies typically send a statement of interest paid sometime in January: Form 1098, Mortgage Interest Statement. Interest expenses, along with property and state income taxes, are usually the three largest deductions found in Schedule A.
Donations and gifts to charity, including those made to a church or place of worship, are reported in this section. For donations in excess of $500 and / or non-cash donations, the IRS requires extensive recordkeeping. For example, the IRS has very specific rules when donating a car.
Schedule B is used to report interest income and ordinary dividends. Individuals that have money in an interest-bearing savings account will receive from their bank and / or financial institution a Form 1099-INT. If dividends were received, then a bank and / or financial institution will also send Form 1099-DIV. The information found on 1099-INT and 1099-DIV is required when completing Schedule B.
While the purpose of Schedule A is to identify tax deductions, which lower taxable income; Schedule B identifies additional income sources, which adds to taxable income.
Schedule A, Schedule B, and Form 1040, are the most common tax forms individuals will file with the IRS. There are several specialized forms that are worth a quick mention too:
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