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A Guide to Creating a Personal Income Tax Return

by Floreena Thomas - 20 Apr 2022, Wednesday 76 Views Like (0)
A Guide to Creating a Personal Income Tax Return

 Calculation of

taxable income is calculated as follows.

(2) Explanation of tax return (Form 1040)

A. Filing Status

(Page 1)

Select filing eligibility. The tax rate and the standard amount of deduction limit differ depending on the filing qualification. Whether or not you are married will be determined at the end of the year (December 31st).

B. Taxpayer Information

(Page 1)

Enter taxpayer information such as the filer's name, social security number, and taxpayer number. When filing a combined tax return for a married couple, it is necessary to include spouse information. Also, even if you file an individual tax return for your spouse, you will need your spouse's social security number or taxpayer number if you wish to have your spouse deducted.

C. Dependents

(Page 1)

The personal deduction has been abolished since 2018, but it is necessary to confirm the eligibility for the dependent tax credit. If eligible, check Child tax credit, etc. (4).

D. Income item (Income)

(Page 1 Line 1-7a)

The total amount of Lines 1 to 7a is the total income. Calculate adjusted gross income by subtracting income adjustment items from total income. This is the basic amount for which various deductions are applied. Income adjustment items include individual retirement account (IRA) contributions, payment of consolation and child support (Alimony), health insurance premiums imposed on self-employed people, and social security tax.

E. Adjusted Gross Income (AGI)

(Page 1 Line 8b)

Adjusted gross income is often used as a basis for limiting deductions.

F. Standard Deduction and Itemized Deduction

(Page 1 Line 9)

The standard deduction has been doubled in exchange for the abolition of the personal deduction. You can choose between the fixed deduction and the itemized deduction, whichever is larger.

G. Qualified Business Income Deduction

(Page 1 Line 10)

Qualified Business Income Deduction is a tax system newly introduced in the Trump tax system and is preferential treatment for individuals doing business. Since there are detailed provisions regarding eligible business income to be covered and it is complicated, it is recommended to consult with an accountant, etc. if it is considered to be covered.

H. Taxable Income and Income Tax (Tax)

(Page 1 Line 11b)

Taxable income is the balance of the adjusted total income minus the fixed deduction or itemized deduction, minus the eligible business income deduction calculated in Line 10. Become.

I. Tax Calculation

(Page 2 Line 12a)

Income tax is calculated using the tax table if the taxable income is less than $ 100,000 and the tax calculation worksheet if the taxable income is $ 100,000 or more.

Schedule 2 Part I

(Page 2 Line 12b)

Use Schedule 2 if you have additional taxes that cannot be filled out directly on Form 1040. This includes repayment of alternative minimum tax (AMT) and excess premium tax credits.

Tips

If AMT taxable income is less than or equal to the AMT deduction, no AMT tax will be incurred. The AMT exemption has increased ($ 111,700 for married couples and $ 71,700 for singles).

J. Child Tax Credit or Credit for Other Dependents

(Page 2 Line 13a)

The dependent tax credit is $ 2000.Deductions for other non-eligible dependents are up to $ 500.SSN is required, but ITIN is fine for other deductions.

Schedule 3 Part I

(Page 2 Line 13b)

When requesting a non-repayable tax credit other than a child tax credit or a tax credit for other dependents. For example, foreign tax credit, education tax credit, general business tax credit, etc.

K. Other Taxes

(Page 2 Line 15) Use Schedule 2 Part II if other taxes cannot be completed on

Schedule 2 PartII Form 1040.     Self-employed tax Unpaid social security tax and Medicare tax Taxes on eligible retirement plans such as IRA Salary-related taxes for employees personally hired at home Health insurance tax

L. Payment Tax

(Page 2 Line 17-19)

Enter the prepaid tax, etc. that offsets the total fixed tax of Line 16 from W-2, 1099. Also, fill in other refundable credits and other taxes from Schedule 3, PART II. The total amount of Lines 17 and 18a is the total amount of tax payment.

Schedule 3 Part II

(Page 2 Line 18)

When requesting a refundable deduction other than earned income deductions, tax incentives for US education, or additional child tax deductions. For example, net premium tax deductions and health insurance tax deductions. Other payments, such as the amount paid in the filing extension application, excessively withheld social security tax.