About Form 1040, U.S. Individual Income Tax Return

Introduction: Navigate the intricacies of tax filing with Part I of our comprehensive guide. Uncover the significance of Social Security Numbers (SSN) in tax matters, ensure correct filing statuses, and grasp the essentials of IRS Individual Taxpayer Identification Numbers (ITINs). From basics to digital assets, we’ve got you covered.

Part  I

Basics-Form 1040 and 1040-SR 

Social Security Number (SSN): 

• Incorrect or missing SSN can impact taxes, reduce refund, or cause delays. 
• Apply for an SSN using Form SS-5 and submit it to the Social Security Administration (SSA) with required documents. 
• Form SS-5 available online at SSA.gov/forms/ss-5.pdf, from local SSA office, or by calling SSA at 800-772-1213. 
• Takes about 2 weeks to get an SSN once SSA has all necessary evidence and information. 
• Ensure that the name and SSN on Forms 1040, 1040-SR, W-2, and 1099 match your social security card. 
• Mismatch may result in reduced or disallowed deductions/credits, and no credit for social security earnings. 
• If Form W-2 shows incorrect SSN or name, notify employer or form-issuing agent promptly. 
• Use the issued SSN to file tax returns, even if it doesn’t authorize employment. 
• If you’ve used an ITIN before receiving an SSN, stop using ITIN and use SSN for tax purposes. 

IRS Individual Taxpayer Identification Numbers (ITINs) for Aliens: 

• Nonresident or resident aliens without an eligible SSN must apply for an ITIN. 
• Takes about 7 weeks to obtain an ITIN. 
• If you have an existing ITIN, use it where SSN is requested on your tax return. 
• Some ITINs need renewal, especially if not used for tax years 2020, 2021, or 2022. 
• ITINs assigned before 2013 must be renewed for filing tax returns. 
• ITIN is for tax use only, doesn’t grant social security benefits or change immigration status. 
• Renewal details can be found at IRS.gov/ITIN. 
• If you receive an SSN after using an ITIN, stop using ITIN and combine tax records under your SSN. 
• More information on ITINs, including application, expiration, and renewal, available in Form W-7 and its instructions 

Nonresident Alien Spouse: 

• Spouse must have SSN or ITIN if filing a joint return or a separate return. 
• Ensure proper identification for tax purposes. 

Presidential Election Campaign Fund: 

• Fund supports Presidential election campaigns, reducing dependence on large contributions. 
• Aims for equal financial footing in the general election. 
• Also contributes to pediatric medical research. 
• Option to donate $3 to the fund by checking the box on the tax return. 
• No impact on tax or refund amount if the box is checked. 

Filing Status: 

• Choose the filing status that applies to you.
• Options (listed in potential tax order):
  • Married filing separately.
  • Single.
  • Head of household.
  • Married filing jointly.
  • Qualifying surviving spouse.
• Refer to Pub. 501 for marital status information. 
• Multiple statuses may apply; select the one resulting in the lowest tax. 

-Married Filing Jointly: 

• You can check the “Married filing jointly” box on Form 1040 or 1040-SR if:
  • You were married at the end of 2023, regardless of living arrangements. 
  • Your spouse died in 2023, and you didn’t remarry in 2023. 
  • You were married at the end of 2023, and your spouse died in 2024 before filing a 2023 return. 
• A married couple filing jointly reports combined income and deducts allowable expenses on one return. They can file jointly even if only one had income or if they didn’t live together all year. Both spouses must sign the return, and once filed jointly, choosing to file separately for that year after the due date is not allowed. 

Joint and Several Tax Liability: 

• If you file jointly, both spouses are generally responsible for taxes, interest, or penalties. This means that if one spouse doesn’t pay taxes due, the other may have to. Filing separately might be considered if you believe your spouse isn’t reporting all income or if you want to avoid responsibility for any taxes due if your spouse doesn’t have sufficient tax withheld. 

Nonresident Aliens and Dual-Status Aliens: 

• Generally, a married couple can’t file a joint return if either spouse is a nonresident alien during the year. However, if a nonresident or dual-status alien was married to a U.S. citizen or resident alien at the end of 2023, they can elect to be treated as a resident alien and file a joint return. Details can be found in Pub. 519. 

-Single: 

• Check “Single” box on Form 1040 or 1040-SR if, on December 31, 2023: 
  • Never married. 
  • Legally separated per state law with a final divorce or separate maintenance decree. 
  • Widowed before January 1, 2023, and didn’t remarry by end of 2023. 
• Exception for those with a child; consider qualifying surviving spouse status 

-Nonresident Aliens and Dual-Status Aliens: 

• Generally, a married couple can’t file a joint return if either spouse is a nonresident alien at any time during the year. 
• Exception: If a nonresident or dual-status alien is married to a U.S. citizen or resident alien at the end of 2023, they can elect to be treated as a resident alien and file a joint return. See Pub. 519 for details. 

-Married Filing Separately: 

• Check “Married filing separately” on Form 1040 or 1040-SR if married at the end of 2023 and filing a separate return. 
• Enter spouse’s name and SSN/ITIN. If no SSN/ITIN, enter “NRA” (Nonresident Alien). 
• Different rules may apply in community property states (see Pub. 555). 
• Generally report only your income, deductions, and credits. 
• Limits access to certain deductions and credits, potentially resulting in higher taxes. 
• Exceptions for the student loan interest deduction, education credits, earned income credit, and child and dependent care credit. 
• Standard deduction not allowed if spouse itemizes deductions. 
• For special cases and situations, see “Joint and Several Tax Liability.” 

-Head of Household: 

• Check “Head of household” on Form 1040 or 1040-SR if unmarried and providing a home for certain persons. 
• Unmarried status applies if: 
  • Legally separated by divorce or separate maintenance at the end of 2023. 
  • Married but lived apart for the last 6 months of 2023 (meet rules for married persons living apart). 
  • Spouse was a nonresident alien, and no election to treat them as a resident alien. 

Tests for Head of Household: 

Test 1: 

• Paid over half the cost of keeping up a home for a parent you can claim as a dependent. 
• Parent didn’t have to live with you. 

Test 2: 

• Paid over half the cost of keeping up a home where you lived, and one of the following lived for more than half of the year: 
  • Any dependent, excluding specific cases (see exceptions). 
  • Unmarried qualifying child not your dependent. 
  • Married qualifying child not your dependent, but you can be claimed as a dependent on someone else’s 2023 return. 
  • Qualifying child not your dependent due to rules for divorced or separated parents. 
• Enter child’s name below filing status checkboxes if not claimed as a dependent. 

Qualifying Child and Dependent: 

• Refer to “Who Qualifies as Your Dependent” for criteria. 
• Ensure correct entry of dependent’s name to expedite return processing. 

Exception to Time Lived with You: 

• Temporary absences for special circumstances (e.g., school, vacation, business, medical care, military service, or detention) count as time lived in the home. 
• Refer to “Kidnapped child” under “Who Qualifies as Your Dependent” if applicable. 

Born or Died in 2023: 

• If the person for whom you kept up a home was born or died in 2023, you may still qualify for Head of Household. 
• Qualifying child must have lived with you for more than half the time they were alive. 
• For other cases, refer to Pub. 501. 
• Adoption, lawful placement for legal adoption, or eligibility as a foster child in 2023 is considered for the living arrangement. 

Married Persons Who Live Apart: 

• Even if not divorced or legally separated at the end of 2023, considered unmarried if: 
  • Lived apart from spouse for the last 6 months, with temporary absences counted. 
  • Filed a separate return. 
  • Paid over half the cost of keeping up the home. 
  • Home was the main home of a child for more than half of 2023. 
  • Can claim the child as a dependent or could claim if not for the rule for Children of divorced or separated parents. 

Adopted Child: 

• Treated as your own child, includes lawful placements for legal adoption. 

Foster Child: 

• A child placed with you by an authorized placement agency or by court order is considered a foster child. 

– Qualifying Surviving Spouse: 

• Check the “Qualifying surviving spouse” box on Form 1040 or 1040-SR. 
• Use joint return tax rates for 2023 if: 
  • Spouse died in 2021 or 2022, and no remarriage before end of 2023. 
• Have a qualifying child (dependent or potential dependent) meeting criteria: 
  • Child didn’t file joint return, have gross income $4,700+, or be claimed by someone else. 
  • Child lived with you all of 2023. 
  • Paid over half the cost of keeping up your home. 
  • Could have filed a joint return with the deceased spouse in the year they died. 

Adopted Child: 

• An adopted child is treated as your own. 
• Includes a child lawfully placed with you for legal adoption. 

Dependent: 

• See “Who Qualifies as Your Dependent” for criteria. 
• List dependents by name and SSN in the Dependents section on Form 1040 or 1040-SR. 

Exception to Time Lived with You: 

• Temporary absences for special circumstances (e.g., school, vacation, business, medical care, military service, or juvenile facility detention) count as time lived in the home. 
• Refer to “Kidnapped child” under “Who Qualifies as Your Dependent” if applicable. 

Child Born or Died in 2023: 

• Child is considered to have lived with you for all of 2023 if born or died in 2023, and your home was their entire residence during their lifespan. 
• Similarly, if adopted in 2023 or lawfully placed for legal adoption, the child is considered to have lived with you for all of 2023 if your main home was their main home for the entire time since adoption or placement. 

Keeping Up a Home: 

• For details on what is included in the cost of keeping up a home, refer to Pub. 501.

Digital Assets: 

• Digital assets are digital representations of value recorded on a cryptographically secured distributed ledger or similar technology. 
• Examples include NFTs, cryptocurrencies, and stable coins. 
• If an asset has digital characteristics, it is treated as a digital asset for federal income tax purposes. 

Reporting Digital Assets on Tax Forms: 

• Check “Yes” on Form 1040 or 1040-SR if, during 2023: 
  • Received (reward, award, payment for property or services); or 
  • Sold, exchanged, or disposed of a digital asset (or financial interest in one). 

Instances to Check “Yes” Include: 

• Receiving digital assets as payment for property or services. 
• Receiving digital assets as a reward or award. 
• Obtaining new digital assets through mining, staking, or similar activities. 
• Receiving digital assets from a hard fork. 
• Disposing of digital assets for property, services, or in exchange for another digital asset. 
• Selling or otherwise disposing of any financial interest in a digital asset. 

Financial Interest in Digital Asset: 

• Ownership of record or an ownership stake in an account holding digital assets. 
• Ownership of a wallet holding digital assets. 

Exempt Actions or Transactions in 2023: 

• Holding digital assets in a wallet or account. 
• Transferring digital assets between owned or controlled wallets or accounts. 
• Purchasing digital assets using U.S. or other real currency through platforms like PayPal and Venmo. 

Important Note: 

• Do not leave the question unanswered; choose “Yes” or “No” by checking the appropriate box on the tax form. 
• For more information, visit IRS.gov/VirtualCurrencyFAQs. 

Reporting Digital Asset Transactions: 

• If, in 2023, you disposed of a digital asset held as a capital asset through sale, trade, exchange, payment, or other transfer: 
  • Check “Yes” on the tax form. 
  • Use Form 8949 to calculate capital gain or loss. 
  • Report the gain or loss on Schedule D (Form 1040). 
• If you received digital assets as compensation for services or disposed of digital assets held for sale in a trade or business: 
  • Report income as you would for similar types (e.g., W-2 wages on Form 1040 or 1040-SR, line 1a; inventory or services on Schedule C). 
• If you disposed of a digital asset by gift: 
  • You may need to file Form 709. 
  • Refer to “Who Must File” and “Transfers Subject to the Gift Tax” in Form 709 instructions for details. 

Standard Deduction: 

• Form 1040-SR includes a Standard Deduction Chart on the last page for easy calculation. 
• Do not submit the Standard Deduction Chart with your return. 

Single and Married Filing Jointly: 

• If you or your spouse (for joint filers) can be claimed as a dependent on another’s return: 
  • Check the appropriate box in the Standard Deduction section. 
  • Married filers can be claimed as dependents only when filing to claim a refund of withheld income tax or estimated tax paid. 

Dual-Status Alien: 

• If a dual-status alien, check “Spouse itemizes on a separate return or you were a dual-status alien” box. 
• Exception: If filing a joint return with a U.S. citizen or resident alien spouse and agreeing to be taxed on combined worldwide income, don’t check the box. 

Age/Blindness: 

• Check boxes labeled “Age/Blindness” if born before January 2, 1959, or blind at the end of 2023. 
• Do not check boxes for a spouse if the filing status is head of household. 

Death of Spouse in 2023: 

• If spouse born before January 2, 1959, but died in 2023 before reaching age 65: 
  • Do not check “Spouse was born before January 2, 1959” box. 
  • A person reaches age 65 on the day before their 65th birthday. 

Death of Taxpayer in 2023: 

• If preparing a return for someone who died in 2023, refer to Pub. 501 before completing standard deduction information. 

Married Filing Separately: 

• If filing status is married filing separately and spouse itemizes deductions on their return: 
  • Check the “Spouse itemizes on a separate return or you were a dual-status alien” box. 
  • If filing status is married filing separately and spouse was born before January 2, 1959, or was blind at the end of 2023: 
• Check the appropriate box(es) on the “Age/Blindness” line. 
• This applies if the spouse had no income, is not filing a return, and cannot be claimed as a dependent on another person’s return. 

Do You Have a Qualifying Child?

Step 1 

Qualifying Child Criteria: 

Relationship: A qualifying child is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant (e.g., grandchild, niece, nephew). 

Age: 

• Must be under age 19 at the end of 2023 and younger than you (or your spouse if filing jointly), or 
• Under age 24 at the end of 2023, a student, and younger than you (or your spouse if filing jointly), or 
• Any age and permanently and totally disabled. 

Financial Support: Did not provide over half of their own support for 2023 (refer to Pub. 501). 

Tax Filing Status: 

• Isn’t filing a joint return for 2023, or 
• Is filing a joint return for 2023 only to claim a refund of withheld income tax or estimated tax paid (see Pub. 501 for details and examples). 

Residency: Lived with you for more than half of 2023. If not, refer to Exception to time lived with you. 

Caution:If the child qualifies as a qualifying child for another person (except your spouse if filing jointly), refer to Qualifying child of more than one person later. 

Procedure: 

Do you have a child meeting these conditions? 

• Yes: Proceed to Step 2. 
• No: Skip to Step 4. 

Step 2 

Is Your Qualifying Child Your Dependent? 

Qualifying Child Determination: 

Citizenship and Residence: 

• Was the child a U.S. citizen, U.S. national, U.S. resident alien, or a resident of Canada or Mexico? 
• Yes: Continue 
• No: STOP, you can’t claim this child as a dependent. 

Marital Status: 

• Was the child married? 
• Yes: See Married person, later. 
• No: Continue 

Filing Status: 

• Are you filing a joint return for 2023? 
• Yes: You can claim this child as a dependent. Complete columns (1) through (3) of the Dependents section on page 1 of Form 1040 or 1040-SR for this child. Then, go to Step 3. 
• No: Continue

Your Dependency Status: 

• Could you be claimed as a dependent on someone else’s 2023 tax return? 
• Yes: STOP, you can’t claim any dependents. Complete the rest of Form 1040 or 1040-SR and any applicable schedules. 
• No: You can claim this child as a dependent. Complete columns (1) through (3) of the Dependents section on page 1 of Form 1040 or 1040-SR for this child. Then, go to Step 3.

Step 3

Child Tax Credit or Credit for Other Dependents Eligibility: 

Identification: 

• Did the child have an SSN, ITIN, or adoption taxpayer identification number (ATIN) issued on or before the due date of your return (including extensions)? 
• Yes: Continue 
• No: STOP, you can’t claim the child tax credit or the credit for other dependents for this child. 

Citizenship: 

• Was the child a U.S. citizen, U.S. national, or U.S. resident alien? 
• Yes: Continue 
• No: STOP, you can’t claim the child tax credit or the credit for other dependents for this child. 
• Age Requirement: 

• Was the child under age 17 at the end of 2023? 
• Yes: Continue 
• No: You can claim the credit for other dependents for this child. Check the “Credit for other dependents” box in column (4) of the Dependents section on page 1 of Form 1040 or 1040-SR for this person. 

SSN Valid for Employment: 

• Did this child have an SSN valid for employment issued before the due date of your 2023 return (including extensions)? 
• Yes: You can claim the child tax credit for this person. Check the “Child tax credit” box in column (4) of the Dependents section on page 1 of Form 1040 or 1040-SR for this person. 
• No: STOP, you can claim the credit for other dependents for this child. Check the “Credit for other dependents” box in column (4) of the Dependents section on page 1 of Form 1040 or 1040-SR for this person. 

STEP 4

Qualifying Relative as Dependent: 

Identification: 

• Does any person meet the conditions to be your qualifying relative? 
• Yes: Continue 
• No: STOP, you can’t claim this person as a dependent. 

Citizenship: 

• Was your qualifying relative a U.S. citizen, U.S. national, U.S. resident alien, or a resident of Canada or Mexico? 
• Yes: Continue 
• No: STOP, you can’t claim this person as a dependent. 

Marital Status: 

• Was your qualifying relative married? 
• Yes: See Married person, later. 
• No: Continue 

Filing Status: 

• Are you filing a joint return for 2023? 
• Yes: You can claim this person as a dependent. Complete columns (1) through (3) of the Dependents section on page 1 of Form 1040 or 1040-SR. Then, go to Step 5. 
• No: Continue 

Dependent Status: 

• Could you be claimed as a dependent on someone else’s 2023 tax return? 
• Yes: STOP, you can’t claim any dependents. Complete the rest of Form 1040 or 1040-SR and any applicable schedules. 
• No: You can claim this person as a dependent. Complete columns (1) through (3) of the Dependents section on page 1 of Form 1040 or 1040-SR. Then, go to Step 5.

STEP 5 

Credit for Other Dependents – Qualifying Relative: 

Identification: 

• Did your qualifying relative have an SSN, ITIN, or ATIN issued on or before the due date of your 2023 return (including extensions)? 
• Yes: Continue 
• No: STOP, you can’t claim the credit for other dependents for this qualifying relative. 

Citizenship Status: 

• Was your qualifying relative a U.S. citizen, U.S. national, or U.S. resident alien? 
• Yes: You can claim the credit for other dependents for this dependent. Check the “Credit for other dependents” box in column (4) of the Dependents section on page 1 of Form 1040 or 1040-SR for this person. 
• No: STOP, you can’t claim the credit for other dependents for this qualifying relative.

Conclusion: Empower yourself with essential tax knowledge by delving into Part I of our guide. From securing your SSN to understanding filing statuses and handling digital assets, you’re equipped to make informed decisions. Stay tuned for more insights in our upcoming content.