Individual Taxation – 2nd Class
• Types of 1040 Forms
• Schedules attached with Form 1040
• Income Tax Formula
• Taxable Income Formula for Individuals
Types of 1040 Forms?
1. Form 1040: This is the one the majority of taxpayers will use to report income and
determine their tax for the year and any refund or additional tax owed.
2. Form 1040-SR is nearly identical to Form 1040, but is printed using a larger font
and includes a chart for determining the taxpayer's standard deduction.
3. Form 1040-X: This form is for taxpayers who need to make amendments to their
tax return after previously filing a Form 1040.
Schedules
1. Schedule A: This common form is used to enter all itemized deductions. These can include medical and dental
expenses, mortgage interest, state and local taxes, charitable donations and casualty and theft losses.
2. Schedule B: This form is used to report interest and dividend income that is greater than $1,500. If you have
interest and dividend income under that amount, you will enter that directly on Form 1040, Lines 2 and 3.
3. Schedule C: This form is for reporting profit or loss from business. It's typically used by independent
contractors, freelancers, and owners of sole proprietorships or single-member LLCs.
4. Schedule D: This form is used for reporting capital gains or losses from investments.
Types of 1040 Forms?
1. Schedule E: Those who have income or losses from rental real estate, royalties, partnerships, S
corporations, estates, trusts, REMICs, or other pass-through entities will report those amounts on
this form.
2. Schedule F: This form is used by farmers to report income and expenses from farming.
3. Schedule SE: For business owners or independent contractors who made a profit of at least $400,
this form is used to calculate self-employment tax.
4. 8812: This form is for claiming the Child Tax Credit and Credit for Other Dependents. If the total child
tax credit amount for all qualifying children in your household exceeds the amount of tax you owe for
the year, then you will prepare this form to calculate the refundable portion of the credit
Individual Income Tax Formula
Individual Income Tax Formula
Gross income
❖ Wages
❖ Interest
❖ Dividends
❖ State tax refunds
❖ Business income
❖ Capital gain/loss IRA income
❖ Pension and annuity
❖ Rental income/loss
❖ K-1 flow-through income/loss
❖ Unemployment compensation
❖ Social Security benefits
❖ Other income
< Adjustments >
❖Educator expenses
❖IRA contributions (traditional)
❖Student loan interest
❖Health savings account
❖One-half self-employment taxes
❖Self-employed health insurance
❖Self-employed retirement
❖Interest withdrawal penalty
Sum up:
Adjusted Gross Income
= Gross Income - Adjustments
Finally
