Summary of How to Calculate a Federal Tax Return
Original post by Stephanie Ellen of Demand Media
Filling out a Form 1040 at tax time can be a daunting process. The instructions for Form 1040 cover dozens of pages. While calculating a federal tax return can be a challenge, there are several basic steps you must complete to calculate your tax for the year. Ensuring that you have accounted for all of your income, credits and deductions is key to filing a complete and correct return.
Gather your documents. In order to complete a federal tax return, you'll need your Form W-2 and/or Form 1099 for each source of earnings.
Download and print a copy of IRS Form 1040, available from the IRS website. You may also obtain a Form 1040 from your local library or from most branches of the U.S. Postal Service.
Enter the information from the Form W-2 and/or Form 1099 into the 1040. Include all wages and earnings, even if you didn't receive a W-2 or a 1099. For example, if you earned $400 from odd jobs for the year, ensure you enter that information in the applicable line.
Add up your income from Lines 7 through 21 and enter that total into Line 22.
Calculate your adjusted gross income by subtracting Line 36 from Line 22. Enter the amount in Line 37 and in Line 38.
Enter the standard deduction from the figures in the far-left column of the 1040 in Line 40. If you are electing to itemize deductions, fill out Schedule A to compute your deductions and then enter the total in Line 40.
Subtract Line 40 from Line 38 and then enter the total in Line 41.
Multiply the number in line 6d by the exemption amount and then enter that total in Line 42. The exemption amount changes from year to year, but it will be listed in line 42. In 2010, the exemption amount was $3,650.
Subtract Line 42 from 41 and enter the amount in Line 43. If line 41 is less than line 42, enter "0."
Calculate your tax from the tax tables listed in the 1040 Instructions and then enter it in Line 44. For example, if you are a single filer and your taxable income from Line 43 was $16,000 then your tax is $1,985.
Tips & Warnings
- If you are uncertain what your filing status should be, refer to pages 12 to 14 in the instruction booklet.
- Income statements (W-2, 1099)
- IRS Form 1040
- Schedule A
About the Author
Stephanie Ellen teaches mathematics and statistics at the university and college level. She coauthored a statistics textbook published by Houghton-Mifflin. She has been writing professionally since 2008. Ellen holds a Bachelor of Science in health science from State University New York, a master's degree in math education from Jacksonville University and a Master of Arts in creative writing from National University.
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