Federal Income Taxes: The 1040

Federal Income Taxes represent a little over one-third of the total revenue of the United States Government. As the driving force behind the entire collection process, publication 1040 is well-known as the most important income tax form. The 1040, with its many sub-form, schedules, and worksheets, forms the basis for income tax calculation and reporting in the United States.

The 1040, along with all other Federal Tax forms, are available online at www.irs.gov, the official website of the Internal Revenue Service. At the IRS website, forms and instructions for those forms are available as separate downloads to make them easier to print and use. Form 1040 packets are also available through the mail by request, at any post office, and sometimes from an employer.

Whether an individual must file a return is mostly determined by the tax payer’s filing status and the amount of money earned during the tax year. For example, a single tax payer who is under 65 years of age and made less than $8,950 for the 2007 tax year is not required to file a return. This is due to the fact that the standard deduction and person exemption add up to $8,950. Subtracting this from the amount made during the year results in $0.00 of taxable income. However, many people, even if they do not have any residual taxable income after deductions and exemptions, file a return to be able to claim carrybacks and carryforwards on income earned in previous and future tax years. This is only possible under certain conditions, especially for owners of businesses and other situations.

Married couples both under 65 years of age filing jointly only must file a return if their combined gross income exceeded $17,900. Other amounts determining the need for file a return are different for people who are married but filing separately, claiming head of household status, or who qualify for widow/widower status with dependents.

If someone can claim you as a dependent, your tax status is different than if this were not the case. Resident aliens are required to file a return as a citizen but these filers may qualify for tax treaty benefits. Nonresident aliens and dual-status aliens may be required to file a return if they were married to a U.S. citizen or resident alien during the tax year or if they elected to be taxed as a resident alien.

Whether an individual tax payer must file a 1040 tax return is determined by several factors including filing status, the amount earned, age, and whether the tax payer was a resident or nonresident alien during the tax year. Each year, changes to the tax laws, increases or decreases in deductions and exemptions, and other pertinent information is published at the beginning of the 1040 form instructions. Tax payers should pay close attention to this information as it may apply to them. For example, the standard mileage rates for 2008 changed for those using a vehicle for business use. Prior to June 30th, 2008 the rate was $0.505 per mile, afterward the amount that can be claimed per mile is $0.585. This information can be vital to reducing the tax payer’s taxable income and, consequently, his/her tax liability.

Always consult with a tax professional for questions about your tax liability.