Saturday, December 24, 2011

Topic #13– 2011 Form 1040 Exclusive – Tax and Credits, Part I


Line 38

Enter the amount on the 2011 Form 1040, Line 37.


Line 39a

If you were born before January 2, 1947, or were blind at the end of 2011, check the appropriate box(es) on line 39a. If you were married and checked the box on Form 1040, line 6b, and your spouse was born before January 2, 1947, or was blind at the end of 2011, also check the appropriate box(es) for your spouse. Be sure to enter the total number of boxes checked. Do not check any box(es) for your spouse if your filing status is head of household.

Blindness

If you were not totally blind as of December 31, 2011, you must get a statement certified by your eye doctor (ophthalmologist or optometrist) that:

1) You cannot see better than 20/200 in lenses, or your better eye with glasses or contact

2) Your field of vision is 20 degrees or less.

If your eye condition is not likely to improve beyond the conditions listed above, you can get a statement certified by your eye doctor (ophthalmologist or optometrist) to this effect instead. You must keep the statement for your records.


Line 39b

If your filing status is married filing separately (box 3 is checked), and your spouse itemizes deductions on his or her return, check the box on line 39b. Also check that box if you were a dual-status alien. But if you were a dual-status alien and you file a joint return with your spouse who was a U.S. citizen or resident alien at the end of 2011 and you and your spouse agree to be taxed on your combined  worldwide income, do not check the box.


Line 40 – Itemized deductions or standard deduction

In most cases, your federal income tax will be less if you take the larger of your itemized deductions or standard deduction.

Itemized Deductions

To figure your itemized deductions, fill in Schedule A.

Standard Deduction

Most people can find their standard deduction by looking at the amounts listed under “All others” to the left of line 40.

Exception 1 – dependent

If you, or your spouse if filing jointly, can be claimed as a dependent on someone else’s 2011 return, use the Standard Deduction Worksheet for Dependents to figure your standard deduction.

Exception 2 – box on line 39a checked

If you checked any box on line 39a, use the chart below the Standard Deduction Worksheet for Dependents to figure your standard deduction.

Exception 3 – box on line 39b checked

If you checked the box on line 39b, your standard deduction is zero, even if you were born before January 2, 1947, or were blind.

CAUTION

If you received a refund in 2011 of an amount (such as real estate taxes) that increased your standard deduction in an earlier year, you generally have to include the refund in your income. See Recoveries in Pub. 525.


Line 41

Subtract line 40 from line 38 .


Line 42 – Exemptions

Multiply the number of exemptions on Line 6d of your 2011 Form 1040, Page 1

The exemption amount for 2011 is $3,700.


Line 43 – Taxable income

Your taxable income is calculated by subtracting the amount on of your 2011 Form 1040, Page 2, Line 41 from Line 42.


Line 44 – Tax

Include in the total on line 44 all of the following taxes that apply.

1) Tax on your taxable income. Figure the tax using one of the methods described here.
2) Tax from Form 8814 (relating to the election to report child’s interest or dividends). Check the appropriate box.
3) Tax from Form 4972 (relating to lump-sum distributions). Check the appropriate box.
4) Tax due to making a section 962 election (the election made by a domestic shareholder of a controlled foreign corporation to be taxed at corporate rates). See section 962 for details. Check the appropriate box and attach a statement showing how you figured the tax.
5) Recapture of an education credit. You may owe this tax if you claimed an education credit in an earlier year, and either tax-free educational assistance or a refund of qualified expenses was received in 2011 for the student. See Form 8863 for more details. Enter the amount and “ECR” in the space next to line 44.

Do you want the IRS to figure the tax on your taxable income for you?

Yes

See chapter 29 of Pub. 17 for details, including who is eligible and what to do. If you have paid too much, we will send you a refund. If you did not pay enough, we will send you a bill.

No

Use one of the following methods to figure your tax.

Tax Table or Tax Computation Worksheet

If your taxable income is less than$100,000, you must use the Tax Table to figure your tax. Be sure you use the correct column. If your taxable income is $100,000 or more, use the Tax Computation Worksheet right after the Tax Table. However, do not use the Tax Table or Tax Computation Worksheet to figure your tax if any of the following applies.

Form 8615

Form 8615 generally must be used to figure the tax for any child who had more than $1,900 of investment income, such as taxable interest, ordinary dividends, or capital gain distributions), and who either:
1) Was under age 18 at the end of 2011,
2) Was age 18 at the end of 2011 and did not have earned income that was more than half of the child’s support, or
3) Was a full-time student over age 18 and under age 24 at the end of 2011 and did not have earned income that was more than half of the child’s support. But if the child files a joint return for 2011 or if neither of the child’s parents was alive at the end of 2011, do not use Form 8615 to figure the child’s tax.

A child born on January 1, 1994, is considered to be age 18 at the end of 2011; a child born on January 1, 1993, is considered to be age 19 at the end of 2011; a child born on January 1, 1988, is considered to be age 24 at the end of 2011.

Schedule D Tax Worksheet

If you have to file Schedule D, and line 18 or 19 of Schedule D is more than zero, use the Schedule D
Tax Worksheet in the Instructions for Schedule D to figure the amount to enter on Form 1040, line 44. But if you are filing Form 2555 or 2555-EZ, you must use the Foreign Earned Income Tax Worksheet instead.

Qualified Dividends and Capital Gain Tax Worksheet

Use the Qualified Dividends and Capital Gain Tax Worksheet, later, to figure your tax if you do not have to use the Schedule D Tax Worksheet and if any of the following applies.

1) You reported qualified dividends on Form 1040, line 9b.
2) You do not have to file Schedule D and you reported capital gain distributions on Form 1040, line 13.
3) You are filing Schedule D and Schedule D, lines 15 and 16, are both more than zero.

But if you are filing Form 2555 or 2555-EZ, you must use the Foreign Earned Income Tax Worksheet instead.

Schedule J

If you had income from farming or fishing (including certain amounts received in connection with the Exxon Valdez litigation), your tax may be less if you choose to figure it using income averaging on Schedule J.

Foreign Earned Income Tax Worksheet

If you claimed the foreign earned income exclusion, housing exclusion, or housing deduction on Form 2555 or 2555-EZ, you must figure your tax using the Foreign Earned Income Tax Worksheet.



Line 45 - Alternative minimum tax

Use Form 6251 to figure the amount, if any, of your alternative minimum tax (AMT). Also see the Instructions for Form 6251 to see if you must file the form.

TIP

An electronic “AMT Assistant” is available on IRS.gov to help you see if you should fill out Form 6251. Enter “AMT Assistant” in the search box.

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Next up: Topic #14– 2011 Form 1040 Exclusive – Tax and Credits, Part II




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