American taxpayers file Form 1040 to report and pay income taxes to the Internal Revenue Service, according to Intuit. The form includes various sections in which the taxpayer reports income and taxes paid and claims exemptions and deductions to calculate taxes owed. Taxpayers can combine the 1040 with other schedules and forms if necessary.Continue Reading
Taxpayers use the first section of Form 1040 to figure out the adjusted gross income by adding up all sources of income that are not tax-exempt, reports Intuit. This includes income not only from wages, rent and self-employment, but also alimony, retirement, capital gains and Social Security benefits. Any income that does not fit specifically into one of the categories is "other income."
In the next section of Form 1040, the taxpayer calculates the deductions on the total income to figure out the total taxable income, reports Intuit. Taxpayers can take deductions for a variety of reasons, itemizing and subtracting the amount of the deductions from the total gross income. If the amount of itemized deductions falls below a certain number, the taxpayer can instead choose to take a standard deduction to lower the taxable income. After taking all possible deductions, the form guides the taxpayer to calculate taxes due for the year and subtract that amount from taxes already paid to figure out if he owes taxes or should expect a refund.Learn more about Taxes