Filling out your Form 1040 tax return will tell you whether you'll receive a refund or you owe taxes to the Internal Revenue Service (IRS). For many taxpayers, this process isn't complicated. Most of the lines on the form provide simple, straightforward directions.
The IRS radically changed the Form 1040 tax return back in 2018. The revised form wasn't well-received. As a result, the IRS made changes to the tax return again for 2019, then tweaked it a little more for tax year 2020.
The steps, schedules, and line numbers explained here apply to the 2021 Form 1040, the return you'll file in April 2022. They'll help you find out just how much you owe the IRS—or better yet, how much of a refund you'll be receiving.
- Use lines on IRS Form 1040 and IRS Schedule 3 to calculate how much tax you owe versus how much you have already paid for the year.
- If you paid more tax than you owe, you will get a refund.
- You can decide to apply part of your tax refund to the next tax year as an estimated tax payment.
- If you are getting a refund, you can have it sent directly to your bank account with direct deposit.
- You can pay any tax you owe with a check, credit card, debit card, or online.
How Do I Calculate My Tax Return?
Your tax return amount is, in general, based on line 24 (total tax owed) and line 33 (total tax paid). Subtract line 24 from line 33. If the amount on line 33 is larger than the amount on line 24, that's what you overpaid. In theory, you should get this amount back as a refund. Enter this overpayment on line 34.
If the total tax owed (line 24) is more than the tax you paid (line 33), you'll owe taxes. Subtract line 33 from line 24 to find out how much. Put this underpayment amount on line 37. This is the amount you owe.
Put "0" on lines 34 and 35a if the result is exactly zero, although this is rare. It means that your payments met your tax liability dollar for dollar. You have no refund coming and no balance due.
Should I Take a Tax Refund or Make an Estimated Payment?
If you overpaid, you can apply that amount to next year's tax debt on line 36 of the 2021 1040 tax return. You might want to consider doing this if you expect that your tax obligation will be more significant next year.
It doesn't have to be all or nothing, though. You can divide your refund between line 35a (the amount you want to be refunded) and line 36. If you're getting a $1,000 refund, for example, you might want to put half of that toward next year's taxes. You would enter $500 on line 35a ("amount of line 34 you want to be refunded to you") and $500 on line 36 ("amount of line 34 you want to be applied to your 2022 estimated tax").
You may need to make estimated tax payments if you are self-employed or have other income that doesn't have tax withholding.
Put the full amount of your refund on line 35a if you don't want to make any advance payments.
How Can I Claim Tax Credits?
Tax credits directly reduce how much you owe the IRS. They're either refundable or non-refundable. If the amount of a refundable credit is more than the tax you owe, the IRS will send you the difference. If your claimed credits are non-refundable, the government doesn't send you the extra if your credits are more than what you owe.
You can claim most tax credits on Schedule 3 of the 2021 Form 1040. These include:
- The foreign tax credit (line 1)
- The credit for child and dependent care expenses (line 2)
- Education credits (line 3)
- The retirement savings contribution credit (line 4)
- Residential energy credits (line 5)
- The net premium tax credit (line 9)
Claiming some of these credits requires filing additional forms. Each line clearly states which form you need to use.
Some credits are claimed directly on Form 1040 rather than on a separate schedule or worksheet. These include:
- Child tax credit and the credit for other dependents (line 19)
- Earned income credit (line 27a)
- Additional child tax credit (line 28)
- American opportunity credit (line 29)
- Recovery rebate credit (line 30)
The Recovery Rebate Credit is a credit you can claim in 2022 if you were eligible for a stimulus payment in 2021 but didn’t receive it. You will claim it on your 2021 tax return. If you didn't receive a stimulus payment for 2020, you can only claim it on your 2020 tax return.
Can I Get My Tax Refund With Direct Deposit?
You can have the amount that appears on line 35a of your 1040 deposited directly to your checking or savings account. Direct deposit is often faster and more secure than having a refund check mailed to you.
To set up direct deposit, you will need the routing and account numbers for the bank account where you want the refund to be sent. You can find these numbers by logging into your bank account online or through an app.
The account and routing numbers are also printed on any checks you can use with that account. If you look at the bottom of the check, you will see two sets of numbers. The first series of numbers should be a 9-digit bank code. This is your bank's routing number. Copy your routing number to Line 35b of Form 1040.
Now check the appropriate box on Line 35c, depending on whether you want your refund deposited into a checking or savings account. Find your account number on your check and enter this on line 35d.
Check your bank numbers multiple times, and call your bank to confirm them if you're not sure. You might not be able to get your money back if it's deposited into the wrong account.
How Can I Pay My Tax Balance?
If you have a balance due on line 37, you have several options for paying what you owe.
Pay Taxes by Check
You can make a check payable to the United States Treasury and mail it to the IRS. On the memo line, write your Social Security number followed by the four-digit tax year and "1040." The IRS will know exactly where to apply your payment with this notation. Mail the check for payment with your tax return.
You can also mail the check with the Form 1040-V payment voucher. If you file it electronically, this should be printed out with your tax return.
Your check should be payable to "United States Treasury" rather than “IRS" or "Internal Revenue Service."
Pay Taxes Online
You can also make payments online by enrolling in the electronic federal tax payment system (EFTPS). You can schedule payments for your balance due or make estimated tax payments here. You can also set up monthly installment agreement payments. EFTPS is free.
IRS DirectPay is another free option. You don't have to sign up and enroll on this site. Instead, you'll need to reenter your banking and identifying information each time you want to make a payment. The site won't save the information for you.
If you use tax preparation software, you'll be able to schedule an electronic funds withdrawal from your checking account. You can select a day that's convenient for you, up to and including that year's tax filing deadline. For example, you can file your return today and schedule a future payment when you get your next paycheck.
Pay Taxes by Credit or Debit Card
You can also pay your taxes by credit card or debit card. The IRS provides links to three payment processors on its website. They charge a processing fee for setting up credit card payments to the IRS.
If you use a credit card to pay your taxes, be sure to eliminate your balance as quickly as possible to avoid costly interest charges.