How to Prepare a 1040 Tax Form

Written By: Marquis Codjia

The Internal Revenue Service (IRS) has three types of fiscal forms that individuals can use to file their returns at year-end. These are 1040, known as the long form; 1040-A, or the short form; and 1040EZ, which is even shorter than 1040-A.

The IRS recommends that people not proficient in tax matters seek the expertise of professionals, such as enrolled agents, certified public accountants, fiscal planners, and tax accountants when dealing with such issues. To prepare a 1040 Tax Form, an individual must follow specific steps, running the gamut from determining filing and status to recording income and computing itemized deductions.

1. Determine Filing Status and Exemptions

A taxpayer must start by indicating his or her personal and residential information. Then, he or she must check the proper filing status depending on the regulatory definition of “status” at the moment. Filing statuses range from head of household and qualifying widow(er) with dependent child to single, married filing jointly, and married filing separately.

2. Record Income

Next, a taxpayer must enter his or her income on the Form 1040. Under IRS rules, income includes wages and salaries, taxable interest, and tax-exempt interest as well as business income and qualified dividends. A taxpayer invariably must have proof of income, such as W-2s and pay stubs. Unemployment benefits, Social Security payments, and investment gains are also integral to income.

3. Calculate Adjusted Gross Income

Adjusted gross income (AGI) is the first step in calculating gross income. From this, a taxpayer must subtract expenses like health savings account deductions, moving expenses, student loan interest deduction, and tuition and other academic fees. A taxpayer must ensure the right paperwork exists to support any expense that would ultimately reduce AGI.

4. Compute Itemized Deductions

A taxpayer must provide a standard deduction or a sum of itemized deductions depending on his or her filing status and financial profile. Itemized deductions must be properly documented and archived in case the IRS seeks to ascertain the amounts reported on the Form 1040. Itemized deductions range from travel expenses and state and local tax payments to mortgage interest payment, investment interest, casualty and theft losses, and gambling losses.

5. Determine Fiscal Remittances

How much tax a person must pay is a function of AGI, itemized deductions, tax rate, and taxable income, among other factors. A taxpayer multiplies taxable income by his or her tax rate to calculate the tax money it must send the IRS.

6. Calculate Refund or Payment Due

The IRS sends a taxpayer a refund if he or she has paid more in taxes than due. The opposite situation creates an obligation for the taxpayer, who must send a check to federal and state fiscal agencies.

7. Sign 1040 Return

Last but not least, a taxpayer must sign his or her Form 1040, be it filed via regular mail or electronically. The IRS typically does not process unsigned, incomplete, and inaccurate tax documents. If the taxpayer prepares his or her own return, he or she must indicate things like occupation, daytime phone number, date, and personal signature. Otherwise, the IRS requires that the designated third-party preparing the return, such as a certified public accountant, sign and date the Form 1040.


Preparing an accurate and complete fiscal return enables a taxpayer to comply with U.S. and state fiscal legislation. The preparation process touches on things like income, itemized deductions, refund calculation, and taxpayer signature.