The 1040 tax form is the one most people use for filing taxes. It’s not the easiest to understand, though. Form 1040 received an overhaul and revamp in 2018 designed to make it shorter and less confusing. But many experts say it didn’t work out that way.
“The IRS tried to reduce the form to postcard size, but this required additional schedules to be attached. And every year after that, the tax form gets expanded,” Abby Eisenkraft, CEO of Choice Tax Solutions Inc. in New York City and IRS enrolled agent, says.
In addition, tax law changes from year to year add complexity. “It’s definitely hard to keep all of the changes straight,” Eisenkraft adds.
Keep reading to find out everything you should know about Form 1040 for tax year 2022.
What Is IRS Form 1040?
Form 1040 is a federal income tax form that most people use to report their tax information to the IRS. Taxpayers fill out the form with their income and any tax deductions or credits they’re eligible to claim. The completed 1040 will also include the taxpayer’s refund or tax liability amount.
Other Types of 1040 Forms
There are several types of IRS 1040 forms, which may or may not apply to your situation:
— Form 1040-NR. You may need to fill this one out if you’re not a U.S. citizen or U.S. national and don’t have a green card, haven’t met the IRS requirement known as the “substantial presence test,” or engaged in trade or business in the U.S. (or, if you represent someone deceased who would have had to fill out this form).
— Form 1040-ES. Self-employed individuals and freelancers who pay estimated quarterly taxes use this form.
— Form 1040-V. This form is a payment voucher taxpayers send to the IRS if they have a balance due on the “amount you owe” line of Form 1040 or 1040-NR.
— Form 1040-X. If a taxpayer made a mistake on a 1040 they previously filed, they can make changes on Form 1040-X.
— Form 1040-SR. Taxpayers 65 and older can use this form. It’s optional but has larger print and a chart designed to help taxpayers calculate their standard deductions.
Before you fill out a Form 1040, make sure you have your W-2 form, which contains your earnings information. If you’re a freelancer or had a side hustle throughout the year, you may have a Form 1099 (or multiple ones) that shows your earnings information.
On the 1040, the first seven lines are all income-related questions. You’ll need to provide information such as interest and dividends you’ve earned, pensions, annuities, IRA distributions and Social Security benefits.
What Is the Difference Between 1040EZ, 1040A and 1040?
The IRS no longer uses Forms 1040EZ or 1040A. The Tax Cuts and Jobs Act, signed into law in December 2017, consolidated the 1040, 1040A and 1040EZ into a single and redesigned Form 1040.
What Is 1040-SR?
The 1040EZ and 1040A no longer exist but the four-page Form 1040-SR is relatively new.
“It’s available for use for those 65 or older, with an increased font size, but those with more complicated tax situations will have to use the regular Form 1040,” Eisenkraft says.
Who Should Fill Out IRS Form 1040?
Anyone who files taxes should fill out Form 1040. “Most taxpayers will only have to file a Form 1040 with no schedules,” Shann Chaudhry, San Antonio business and estate attorney, says. In other words, taxpayers with uncomplicated tax situations will likely fill out Form 1040.
Where Can I Get Tax Year 2022 Form 1040?
[READ: 15 Tax Questions Answered.]
What to Know About 1040 Schedules
Your 1040 will come with a number of schedules — like Schedule 1 and Schedule A — that are additional forms. Think of the 1040 like a math worksheet: You plug in various numbers from a schedule (Form 1040 will tell you which one to use), and add the schedules’ totals to your Form 1040.
Form 1040 packs in a lot of information but a few areas you should pay particular attention include:
Charitable deductions. Generally, charitable contributions go on Schedule A, which you use to claim itemized deductions. But many people don’t itemize since it became more financially advantageous for them to claim the standard deduction, which the IRS doubled in 2018. Thanks to temporary expansion measures, however, those who claim the standard deduction can also claim a limited deduction of $300 (or $600 if married filing jointly) to qualifying charities.
Cryptocurrency. A question regarding cryptocurrency appears near the top of tax year 2022’s Form 1040: “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”
“The IRS has been cracking down on proper reporting of income from Bitcoin, Ethereum and other digital currencies,” Chaudhry says, so it’s important to understand how cryptocurrency is taxed. For example, if you sold cryptocurrency in 2022, you’ll be expected to report any capital gain or loss.
Chaudhry also says some brokerages and crypto exchanges “are sending (taxpayers) various flavors of 1099s.”
For example, he says you might receive a 1099-K form if you engage in high-volume trading; a 1099-B if you show gains or losses from buying and selling cryptocurrency; or a 1099-MISC for other activities involving cryptocurrency.
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Update 01/30/23: This story was published at an earlier date and has been updated with new information