For the next few days, our goal will be to help you the reader to get your tax return ready to file. We will offer practical advice that should allow you to accomplish this goal whether you are preparing the return yourself or submitting it to a preparer, the common goal is for your return to be postmarked and submitted on or before midnight October 15th.
Note: We are giving an overview of each line item and the types of income that are generally covered on the form 1040A. If your situation is less common, or if there is any question regarding any line or your specific situation, please consult the instructions for more in depth handling of your situation or contact the IRS directly at 1-800-829-1040.
Line 7, Wages, salaries, tips, attach Forms W-2. If you are mailing your return, don’t forget to attach your W-2 form. If you do, the processing of your return may be delayed. You may find the IRS sending you a letter advising that you to send a copy. We want to avoid these delays, correct? For best results, you may want to staple it so that it is securely attached to the form. In addition, make sure that your W-2 form shows your correct name and social security number. I hope that each and every one of you had made sure before letting October 6 dawn on you before addressing this issue. If either your name or your social security number is incorrect on the W2 form, please contact your employer for a corrected W-2.
For those that are e-filing your returns make sure that you or your preparer input the correct name and identification number not only for yourself, but for your employer. Incorrect names and identification numbers will cause your return to be rejected. At this time, you only have eight days to file, hardly a time to deal with rejected return files.
Lines 8A, Taxable interest, attach Forms 1099 INT or 1099 OID if required. This is the income generated from savings, checking accounts, money markets, CD’s, savings bonds, and the like. If your 1099 INT shows federal income tax withheld in box 4, you will need to attach a copy of it to your tax return to get credit. If you received only one copy from the payer, make a copy of it and submit it with your income tax return. Do not send your one and only copy. Staple it securely to your return. Even if you did not receive a 1099 INT or OID from the payer, you are still required to report the interest income if it exceeds $10. If your interest income exceeds $1500, do not forget to attach Schedule B, Interest and Dividends, listing each payer and the amount of interest that they paid you.
Line 8B, Tax Exempt Interest. This amount appears in box 8 of your 1099 INT form. Don’t worry; you won’t have to pay taxes on it. The IRS is just curious as to how much income you won’t be taxed on with them.
Line 9A, Ordinary Dividends. This amount is shown on line 1A of your Form 1099 DIV. If your dividend income exceeds $1,500 or you received the dividends on another person’s behalf (nominee), you will need to file Schedule B, Interest and Dividends, listing each and the amount. As a nominee, you would subtract the nominee amount from your overall dividend income.
Line 9B, Qualified Dividends. This amount is shown of line 1B of your Form 1099 DIV.
Line 10, Capital Gain Distributions. If you received a 1099 DIV with amounts in boxes 2b, 2c, or 2d, enter the amount from line 2a on this line. In addition, it is recommended that you use the worksheet for qualified dividends and capital gains worksheet on page 36 to see if your tax might be lower than the amount from box 2a.
Line 11A, IRA Distributions. For those who received distributions from a traditional, Roth, SEP, or SIMPLE IRA. You may have received Form 1099R, Distributions From Pensions, Annuities, IRA, et al or similar statement. This amount is shown in box 1, Gross Distribution.
Line 11B, Taxable Amount. This is the amount that appears in box 2 of Form 1099R, Taxable Amount, or similar statement. If you rolled your total IRA over, the taxable amount is zero. Make sure that you write “Rollover” next to 15B as large and as clearly as you can so you will not be contacted by the IRS at a later regarding this amount.
Line 12A, Pensions and Annuities. For those who received distributions from a pension plan, including TSP, CSRS, 401K, 403B, and 457B plans. You may have received Form 1099R, Distributions From Pensions, Annuities, IRA, et al or similar statement. This amount is shown in box 1, Gross Distribution.
Line 12B, Taxable Amount. This is the amount that appears in box 2 of Form 1099R, Taxable Amount, or similar statement. However, if you are receiving a pension from your employer prior to minimum retirement age due to disability, instead of reporting the amount here and on 16A above, you should report this amount on line 7, Wages, Salaries, and Tips. For those that must use the simplified method for their pension, see the instructions for the Simplified Method Worksheet on Line 24. For those that received Form 1099 RRB, see Publication 525. If you received a military disability pension, see Publication 525.
Line 13, Unemployment Income and Alaska Permanent Fund Dividends. The amount is shown in box 1 of Form 1099G.
Line 14A, Social Security Benefits. The amount is shown in box 3 of Form 1099 SSA. To determine if any of your benefits are taxable, use the worksheet in the 1040A instructions on page 25. However, see page 26 to for the exceptions to using the worksheet. If you repaid benefits, this amount will be shown in box 4 of Form 1099 SSA. If you repaid benefits that exceed the amount received in box 1, then none of your benefits are taxable.
Line 14B, Taxable Amount. This amount is calculated from the worksheet, line 18 on page 25.
Line 15, Total Income. This amount is calculated by adding lines 7 through line 14B.
Lastly, with these lines only numbers are necessary. Questions arise as to whether one should use whole numbers, round, or use the cents. The answer to that is personal preference. If you prefer to round, like I do, 50 cents and above is rounded to the next highest number, below 50 cents stays the same. No matter which one you do, the main goal is to have neat and legible numbers. As previous stated in parts 1 and 2, if your handwriting leaves much to be desired, use a computer program and print a copy or go to the IRS website at www.irs.gov. and input your figures inside their forms and print your copy from there. At all costs, make sure that your math is correct for the total. If you are mathematically challenged, please employ the use of a calculator.
Line 16, Educator Expenses: Eligible educators can deduct up to $250 of qualifying expenses. You must be a teacher, instructor, counselor, or teacher’s aid to grades K-12 and worked at the school for at least 900 hours during the school year. Qualifying expenses are those that are ordinary (common and accepted in your field) and necessary (helpful and appropriate for your professional as an educator). For more information regarding qualifying expenses, see page 26 of the 1040A instructions.
Line 17, IRA Deductions: You may be eligible to deduct IRA contributions that you made to a qualifying IRA. To determine your eligibility and the amount, you must read the instructions on page 26 and complete the worksheet on lines 27-28 of the 1040A instructions.
Line 18, Student Loan Interest Deduction: If you repaid your student loans, you may qualify for this deduction. See page 29 for your eligibility requirements and to complete the worksheet for your deduction amount.
Line 19, Tuition and Fees Deduction: If eligible, you can deduct the tuition paid for yourself, spouse, and dependents. Attach Form 8917. If you are using software, your software will compare the educational expenses that you paid and will suggest the best deduction for your personal circumstances to take, whether it is the Tuition and Fees Deduction or the Education Credit on Form 8863.
Tip: If you are preparing your return by hand or via computer without the benefit of a computer program, make sure that you add and subtract the numbers correctly and that your handwriting is legible.
Line 20, Total Adjustments to Income. This amount is calculated by adding lines 16 through 19.
Line 21, Adjusted Gross Income. This amount is calculated by subtracting line 20 from line 15.