Calculating Your Federal Income Taxes

Posted on: 20 October 2018

Most individuals fill out a 1040 tax form. This tax form is the general tax form that most individuals use for filling out taxes. Although this is one of the easier tax forms to fill out, it still requires a lot of information and attention to detail be used while filling out the form. 

Start with Personal Information

At the top of the tax form, you just need to provide your basic personal information, such as your name, address, and social security number.

This is also where you will declare your filing status. If you are not married but are supporting a dependent, you can file as "Head of Household". A dependent can be a minor child or an adult who are provide more than half of their financial support for and who makes less than the yearly income required to file their own taxes. If you are married, this is where you have to decide if you and your spouse are filling out taxes together or separately.

Figure Out Your Exemptions

Everyone is entitled to at least one exemption for themselves. An exemption allows you to take away a set amount of money from your income to lower your taxes. If you and your spouse are doing your taxes together, you would have two exemptions. If you have kids or dependents, each one would count as an exemption. In basic terms, you get one exemption for each person who is supported by whomever is filing taxes.

Filling in Income

If you just work a single job, filling in the income portion of your taxes can be really easy. You just need to take the W-2 provided by your employer, and transfer that information on your taxes.

If you have other forms of income, this is where you will list them as well. Common additional forms of income include things such as Social Security benefits, pension and annuities, IRA deductions, child support and business income. You should have a year-end statement for each of these types of income that you can use to fill in the corresponding lines on your 1040 tax form.

Figuring Out Deductions

Deductions are expenses the government allows you to take out of your wages in order to come up with your taxable income. Deductions include things such as health savings account deduction, student loan interest deductions, tuition and fee deduction, and moving expenses. If you work for yourself, this is where you deduct your self-employment tax and self-employment health costs.

Taxes & Credits

Next, you need to figure out your taxes and credits. This is where you will start with your gross income, and subtract a standard deduction and exemptions. This is where you will figure out what you actually owe in taxes. This is also where you will get to apply credits for child care and contributing to your retirement fund.

Even filling out the simplest tax form can be a complicated process. That is why it is always smart to work with a 1040 Tax Preparation for Individuals professional when filing out your tax forms or at least have them checked by a tax professional to make sure that you did everything right .