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Individual Income Tax Guide

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Overview

Line 7 – Wages, Salaries and Tips, etc.

Line 8a – Taxable Interest

Line 8b – Tax-Exempt Interest

Line 9a – Ordinary Dividends

Line 9b – Qualified Dividends

Line 10 – Taxable Refunds, Credits or Offsets of State and Local Income Taxes

Line 11 – Alimony Received

Line 12 – Business Income or Loss

Line 13 – Capital Gain or Loss

Line 14 – Other Gains or Losses

Line 15 – IRA Distributions

Line 16 – Pensions and Annuities

Line 17 – Rental real estate, royalties, partnerships, S corporations, trusts, etc.

Line 18 – Farm Income (and Loss)

Line 19 – Unemployment Compensation

Line 20 – Social Security Benefits

Line 21 – Other Income


Overview

Your gross income before adjustments or deductions is reported in the “Income” section on page 1 of Form 1040. Your gross income includes income from all sources, unless the income is otherwise excluded from gross income under a section of the tax code. Income can be received in the form of money, property, or services.  

You report the components of gross income on lines 7 through 21 on page one of Form 1040. The total of these lines is reported on line 22.

Constructive Receipt of Income: In general, income is included in your gross income when you have constructively received the income. You have constructively received income when you have access to the income or it is available to you, even if you do not have actual possession of the income.

Example:  You receive a check for work you have done in 2016 but do not cash or deposit the check until 2017. Because you had access to the income in 2016, it is taxable to you in 2016.

For more information about the constructive receipt of income, see the Constructive Receipt page.

Assignment of Income: You cannot avoid having to include income in your gross income by assigning the income to another person before you receive it.

Example: You have your employer pay part of your compensation directly to a charity. The amount paid to the charity is included in your income; however, if the amount paid qualifies as a deductible  charitable contribution, you may be able to take a deduction for it on Schedule A if you itemize deductions.

Example: You have your employer pay part of your pay directly to your ex-wife. The amount paid to her is included in your income.  If the payment qualifies as alimony, you may be able to take an above-the-line deduction for it on Form 1040.

For more information about the assignment of income, see the Assignment of Income Doctrine page.

Prepaid income: In general, if an individual receives payment in one year for services that he or she will provide in a future year, the payment is included in gross income in the year it is received, not the year in which the individual performs the services.

Example: You receive a payment in 2016 for providing landscaping services in 2016 and 2017.  Although you will not perform some of the services for which you are being paid until 2017, the full amount of the payment is included in your income in 2016.


Lines in “Income” Section of Form 1040

Each line in the Income section on page 1 of Form 1040 is discussed below.

Line 7 – Wages, Salaries, Tips, etc.: Employee compensation, including wages, salaries and tips, and certain other compensation related income, is reported on this line. For most taxpayers, the main item reported on this line is employee regular salary or wage compensation reported to the taxpayer  box 1 on Form W-2, Wage and Tax Statement, but a number of other items, many of which are also reported on Form W-2, are also included here.

Wages or salaries:  Wages, tips, and other compensation related to services you (and your spouse, if you are filing married filing jointly) provided as an employee that are reported to you by an employer in box 1 of a Form W-2 are included on line 7. The amount reported to you in box 1 by an employer, along with regular salary and wages, may include:

Missing W-2: If you did not receive a Form W-2 reporting compensation that you received from an employer during the year, you must still report that compensation on line 7. See here for more information about what to do if you did not receive a W-2 or you received one and you know the information on it is incorrect.

If you didn’t receive a W-2, and your employer did not withhold social security or Medicare taxes from your pay, you must also file Form 8919, Uncollected Social Security and Medicare Tax on Wages.

Other income reported on Line 7: The following income items that are not include in box 1 on Form W-2 are also included in the amount you report on line 7:

Chapter 2 – Income

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