23 Mar 3 Line Items On Your Form 1040 That You Should Memorize
What does your income tax return say about your finances? Many taxpayers may respond, “great question.” Then we may hear crickets (silence) sort of speak. Let this not be your response. With the enactment of the Tax Cuts and Jobs Act, we have a new Form 1040, U.S. Individual Income Tax Return and new Form 1040 Schedules. Note the below eye-opening line items on your tax return:
AGI. These letters represent Adjusted Gross Income which is on line 7. This amount may be requested to acquire your tax transcript or to e-file your tax return.
Total Tax. Total tax is represented on line 15. Tax benefits such as deductions and credits reduce taxable income. Generally, the lesser your taxable income is the less tax your pay. Further, review your total tax for the past three years. Do you see a pattern? Manage your withholdings and/or estimated tax payments to equal your total tax.
Penalty of Perjury Statement. This statement is as follows: Under penalty of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct and complete. Declaration of preparer (other than the taxpayer) is based on information of which the preparer has any knowledge. Tax responsibility is a serious affair and requires careful consideration which may include partnering with a tax professional.
Two best practices during tax season are receiving a copy of your return and reviewing your return. Request that your preparer review the return with you; but, at the very least you should thoroughly examine your return. In summary, be an informed, responsible and attentive taxpayer. Best wishes!