Understanding Income Taxes

UNDERSTANDING INCOME TAXES All Income Exclusions 1 Total Income Deductions for AGI 2 Adjusted Gross Income Deductions from AGI + Exemptions 4 Taxable Income Total Tax = Income Tax5 Credits 6 + Other Taxes 7 After-Tax Income IRS Form 1040 summarizes your tax information for the year-Some numbers come from additional forms called "Schedules" All Income is everything that you received during the year. Some income, such as tax-free gifts, is excluded, which is why Total Income can be less than All Income. Losses reduce your Total Income Business losses (Schedule C) Capital losses (Schedule D) Farm losses (Schedule F) Deductions for AGI reduce your Adjusted Gross Income Educator expenses Health savings account deduction (Form 8889) Deductions from AGI reduce your Taxable Income Standard deduction or itemized deductions (Schedule A): Medical and dental expenses Moving expenses (Form 3903) Self-employment taxes (Schedule SE) Self-employed retirement plans and health insurance Alimony IRA (Individual Retirement Account) contributions Local taxes and property taxes Student loan interest Mortgage interest (Form 1098) Tuition and fees (Form 8917) Gifts to charities Casualty and theft losses (Form 4684) Job expenses (Form 2106) 1040 Department of the Treasury-Internal Revenue Service U.S. Individual Income Tax Return Department of the Treasury-Intermal Revenue Service Form 1040 (2006) Page 2 E 1040 U.S. Individual Income Tax Return 2008 AS Use Only-Do not wrte or staple in this space. Тах and Credits 38 Amount from line 37 (adjusted gross income) - ... - 39a Check ( O You were born before January 2 1944, (99) For the year Jan. 1-Dec. 31, 2008, or other tax year beginning , 2006, ending 20 O Blind. ) Iotal boxes OMB No. 1545-0074 lDeductions from AGI 3 Label O Spd itemiz Your firat name and initial Last name Your social security number if: (See instructions on page 14.) Use the IRS label. Otherwise, please print or type Presidential Election Campaign> Check here if you, or your spouse if filing jointly, want $3 to go to this fund (see page 14) ► b If your spouse If a joint retum, apouse's firet name and initial Last name Spouse's social security number c Check if standard deduction includes real estate taxes or disaster loss (see page 34) ► 39c L |40 Itemized deductions (from Schedule A) or your standard deduction (see left margin) Subtract line 40 from line 38 Standard Deduction 40 for- Home addrees (number and street). If you have a P.O. box, see page 14. Apt. no. You must enter your SSN(s) above. 41 • People who 41 checkéd any box on line If line 38 is over $119,975, or you page 36. Otherwise, multiply $3,5d Exemptions R 42 Sual, see City, town or post office, state, and ZP code. If you have a foreign addrees, see page 14. e 6d 42 Checking a box below will not change your tax or refund. O You O Spouse 39a, 39b, or 39c or who can be claimed as a 43 Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- .Check if anyx is from: a Formis) 8814 -O Fom 4972 44 44 page 36). Income Tax Tax (see page 1O Single 4 O Head of household (with qualifying person). (See page 15.) If dependent, 45 45 Alternative minimum tax (see p see page 34. Filing Status 2 O Married filing jointly (even if only one had income) 3 O Married filing separately. Enter spouse's SSN above the qualifying person is a child but not your dependent, enter this child's name here. 46 Add lines 44 and 45 46 • All others: 5. Foragh tax credit. Attach Form 1116 if required Credit for child and dependent care expenses. Attach Fom 2441 47 Check only one box. 5 O Qualifving widowier) with dependent child (see page 16) 47 Single on Mamied filing and full name here. 48 48 separately, $5,450 Boxes checked on 6a and 6b No. of children on 6c who: • lived with you • did not live with you due to divorce or separation (see page 16) Dependents on 6c not entered above Credit for the elderly or the disabled. Attach Schedule R Education credits. Attach Form 8863 6a 49 Yourself. If someone can claim you as a dependent, do not check box 6a Spouse c Dependents: 49 Exemptions Credits 50 Mamied filing jointly or (2) Dependent's social security number (3) Dependent's (4)Vir qualtyng relationship to you Retirement savings contributions credit. A Child tax credit (see page 42). Attach Fom be01f requirea Credits from Form: a D8306 Other credits from Fom: a O3800 bO 8801 c O Add lines 47 through 54. These are your total credits Subtract line 55 from line 46. If line 55 is more than line 46, enter -0- 51 chld for chid tax (1) First name Last name credt (see page 17) 52 $10,900 b O 8839 c O 5605 53 53 If more than four dependents, see page 17. П Head of household, $8,000 54 54 55 55 56 56 d Total number of exemptions claimed Add numbers on lines above 57 Self-employment tax. Attach Schedule SE Unreported social security/ Additional tax on IRAS, othe Additional taxes: a Add lines 56 through 60. This is your total tax 57 Other Taxes I 8919 Other Taxes 58 Wages, salaries, tips, etc. Attach Form(s) W-2 8a Taxable interest. Attach Schedule B if required 58 Income 8a 59 required aDAEIC pavments bHousehold employment taxes. Attach Schedule H 59 Lвь | b Tax-exempt interest. Do not include on line 8a 9a Ordinary dividends. Attach Schedule B if required b Qualified dividends (see page 21) 60 60 61 Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax 9a 61 L 9ь | 62 Payments 62 Federal income tax withheld from Forms W-2 and 1099 10 Taxable refunds, credits, or offsets of state and local income taxes (see page 22) 10 63 2006 estimated tax payments and amount applied from 2007 retum 63 If you have a 64a Earned income credit (EIC) qualifying child, attach Schedule EIC. 65 was withheld. 11 Alimony received 11 64a 64b Business income or (loss). Attaph Schedule C or C-EZ 12 O 13 12 b Nontaxable combat pay election Income 13 Capital gain (loss). Attach S jred, check here 65 Excess social security and tier 1 RRTA tax withheld (see page 61) Additional child tax credit. Attach Form 8812 .. If gel see page 1 66 Other gains or (losses). Attach | 15a | 16a 14 66 15h b Taxable amount (see page 23) b Taxable amount (see page 24) 15a IRA distributions 15b 67 67 Amount paid with request for extension to file (see page 61) Credits from Form: a2439 ÞN4136 cD8901 dO8885 68 16a Pensions and annuities 16b 68 69 17 18 Enclose, but do not attach, any payment. Also, please use Form 1040-V. Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E Fam income or (loss). Attach Schedule F .... Unemployment compensation 69 First-time homebuyer credit. Attach Form 5405. Ressuen Recovery rebate credit (see worksheet on pages 62 and 63) 18 70 70 19 19 71 Add lines 62 through 70, These are your total payments 71 | 20a Ib Taxable amount (see page 26) 20b 72 20a Social security benefits Other income. List type and amount (see page 28) ...----- Add the amounts in the far right column for lines 7 through 21. This is yourtotal income Refund Direct deposit? 73a Amount of line 72 you want refunded to you. If Form 8888 is attached, check here O See page 63 and fill in 73b, 73c, and 73d, d Account number or Form 8888. Amount You Owe 72 If line 71 is more than line 61, subtract line 61 from line 71. This is the amount youoverpaid 21 21 73a 22 22 • b Routing number c Type: O Checking O Savings 23 Educator expenses (see page 28) 23 Adjusted Gross Income 24 Amount of line 72 you want applied to your 2009 estimated tax | 74 Certain business expenses of reservists, perfoming artists, and fee-basis govemment officials. Attach Form 2106 or 2106-EZ Health savings account deduction. Attach Form 8889 74 24 75 Amount you owe. Subtract line 71 from line 61. For details on how to pay, see page 65 75 25 76 Estimated tax penalty (see page 65) | 76 | 25 26 Moving expenses. Attach Form 3003 26 Do you want to allow another person to discuss this return with the IRS (see page 66)? O Yes. Complete the following. O No Third Party Designee 27 27 One-half of self-employment tax. Attach Schedule SE Self-emple SEP, SIMPLE, and qualific plans Self-emple Penalty o 31a Alimony paid b Recipient's SSN Designee's Phone Personal identification 28 name no. number (PIN) Deductions for AGI Sign Here Under penaltiee of perjury, I dedare that I have examined thie return and accompanying schedulee and statements, and to the beet of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. 29 Your aignature Date Your occupation Daytime phone number 31a Joint return? See page 15. Keep a copy for your 32 IRA deduction (see page 30) 32 33 Spouse's signature. If a joint return, both must sign. Date Spouse's occupation Student loan interest deduction (see page 33) Tuition and fees deduction. Attach Fom 8017 33 34 34 records. 35 Date Preparer's SSN or PTIN 35 Domestic production activities deduction. Attach Form 8903 Add lines 23 through 31a and 32 through 35 Subtract line 36 from line 22. This is your adjusted gross income Paid Preparer's Use Only Preparer's signature Firm's name (or youre if self-employed). addreee, and ZIP code Check if self-employed O 37 37 EIN For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 88. Cat. No. 11320B Fom 1040 (2008) Phone no. Form 1040 (2006) O Printed on recycled paper Form SeeingFinance.com/ Designed By Paul Van Slembrouck