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When You Have to Use IRS Form 1040…

If you’ve said goodbye to those easy simple days when you could prepare your income tax return in about 20 minutes on the user-friendly 1040EZ, well all I can say is welcome to the adult world.  Not to say that a 20-something isn’t an adult.  It’s just that having one job and no kids, no investments has its own simple grace and usually the complexities and traumas of true adulthood just haven’t hit yet.

Maybe now you’ve become brave enough to start that business you’d always dreamed about.  Or you’ve had kids.  Or you make a lot of money, or you’ve sold a house.  These are all examples of life events that will cause you to have to use the IRS Form 1040 rather than the 1040EZ or even the in-between 1040A.

Only IRS Form 1040 Has Schedule C

IRS form 1040 is the form you have to use if you are self-employed.  That’s because the other two forms don’t have Schedule C.  Schedule C is what is used when you want to report profit or loss from a business.  You enter your income form your business, your expenses, and come out with either a positive amount (which would mean you had a profit) or a negative amount (loss…too bad).

Now, Schedule C is used for reporting business profit or loss if your business is set up as a sole proprietorship.  If it’s anything else (Corporation, S-Corp) then it’s a whole different ballgame.

Only IRS Form 1040 Has Schedule A

If you want to itemize your deductions, then you’re using IRS Form 1040, too.  That’s because only the 1040 form has Schedule A.  It’s called Itemized Deductions, and you’ll want to itemize if the total of your itemized deductions is more than the standard deduction, which the IRS gives you like a freebie.

Only IRS Form 1040 Has Schedule D

If you sold property, again you are locked into using IRS Form 1040.  It’s the only form with Schedule D Capital Gains & Losses.  Selling a home and selling stocks are the two most common reasons for filling out and attaching a Schedule D to your IRS form 1040.

Only IRS Form 1040 Has Schedule B

Well, there was an A, C, and a Schedule D so we had to include the B as well.  And yes, you have to use IRS Form 1040 if you are attaching Schedule B.  You would be doing that if you had more than $1500 in taxable interest or ordinary dividends.  If you make a lot of passive income, Schedule B is for you, and therefore so is IRS form 1040.

 

 

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IRS Transcript

If you need an IRS Transcript to fulfill requirements of applying for a loan, here’s how you get one.  The IRS makes it easy for you, surprisingly!  Another good thing: an IRS Transcript is totally free.  Now, if it’ s a copy of your tax return that you need, that’s a different story.  Also, it’s a totally different IRS form.  Usually lenders don’t need your entire tax return to get the necessary information for making a decision on whether to fund your loan.  They just need the vital statistics, which are what’s on an IRS Transcript.

How to Order an IRS Transcript

If you are a phone-based person, you can call the IRS to order a transcript.  The number is 1-800-908-9946.  Alternatively, you can order one online at https://sa1.www4.irs.gov/irfof-tra/start.do.  It’s on the irs.gov website.  By the way, a note on security and the internet: if you’re ordering an IRS transcript and you don’t see irs.gov somewhere in the address line then GET OUT.  It’s a scam website that is trying to steal your identity by having you type in your Social Security number and other vital personal information.

Yes, the IRS website transcript ordering page will ask you for personal information so do that address check before entering anything.  You’ll need your Social Security number, your date of birth, your street address and your zip code.  That’s the first screen.  Once you enter that info, you’re done entering information.

If you’re ordering an IRS transcript online, the only place you can have it sent is to yourself.

What’s Included on the IRS Transcript?

Whoever gets that copy of your IRS transcript will be able to know the following things about you:

  • your taxable income
  • your adjusted gross income
  • any adjustments you made to taxable income, like tax credits etc
  • your marital status

You may think it doesn’t matter what adjustments to income you made on your income tax return, but your adjustments are based on your life.  For example, if you have dependents then that’s basically spelled out in plain English on your IRS transcript because having dependents means you adjust the heck out of your income because you get all kinds of tax credits when you have dependents.

What Form is Needed for an IRS Transcript?

Since the only place you can have an IRS transcript sent if you order it online is to yourself, you’ll need to fill out a paper form if you want one sent directly to a lender or a school.  You will need IRS Form 4506-t.  It’s short and easy; you just download it, fill it out, and mail it to the address provided.

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