How to Calculate Tax Balance Due on Form 1040
Learn how to prepare your 1040 form with these step-by-step instructions.
Lines 72 or 75: Refund or Balance Due
- Using a calculator, enter your total payments from line 71, and then subtract your total tax from line 63.
- If the result is less than zero (a negative number), then you have a tax refund. Put the answer (ignoring the negative sign) on line 72.
- If the result is more than zero (a positive number), then you have a balance due. Put the answer on line 75.
- If the result is exactly zero, then put "-0-" (zero) on lines 72 and 75. Your payments exactly met your tax liability, and you have no refund and no balance due.
Line 73a and 74: Refund Amount and Estimated Tax Payment
If you are getting a tax refund, you can choose how much of the amount on line 72 you want to be refunded to you, and how much you want to be applied to next year's estimated tax payments.
If you expect your taxes to be higher next year, or if you are making estimated tax payments, you should consider applying some of your refund amount.
If you want to make an estimated tax payment, put the amount of your estimated payment on line 74. Then put the remainder of your refund amount on line 73a. If you do not want to make any estimated payments at this time, then put the full amount of your refund on line 73a.
Lines 73b, c, and d: Direct Deposit
If you are getting a refund, the amount on Line 72a can be deposited directly to your checking or savings account. Getting direct deposit is faster and more secure than getting a refund check mailed to you.
Get out your checkbook, and look at one of your checks. In the bottom left-hand corner, you will see lots of numbers. The first series of numbers should be a 9-digit bank code. This is called the Routing Number. Copy your routing number to Line 73b.
Next, check the appropriate box on Line 73c, depending on whether you want your refund deposited into a checking or savings account. Next, find your account number on your check. Enter your account number on Line 73d. Double check – even triple check! – your bank numbers. If you are not sure, call your bank and ask them.
How to Pay a Balance Due Safely and Accurately
If you have a balance due on Line 75, there are several options the amount owed. Generally, people want to write a check and mail it to the IRS. Make the check payable to the United States Treasury, and write your Social Security Number followed by the four-digit tax year and 1040 (e.g. "2015 1040").
With that notation. the IRS knows exactly where to apply for your payment. Mail the check for payment with your tax return. Or, if you filed electronically, mail the check along with the Form 1040-V payment voucher that printed out with your tax return.
You should never make a check payable to the "IRS" – every so often an IRS employee steals these checks and alters them. "IRS" can be easily altered to "MRS SMITH" or "MR. SMITH" or "J.R. SMITH" or any other combination you can think of. To prevent this, simply make the check payable to "United States Treasury" – that way there is nothing that can be altered.
You can also pay your tax bill electronically, either over the Web, over the phone, or by specifying a direct debit. The IRS prefers if you make your tax payments electronically, because there are no checks that can be stolen or lost in the mail, and electronic payments can be traced easily and quickly.
If you use tax preparation software, you can schedule an electronic funds withdrawal from your checking account for a day convenient for you, up to and including that year's tax filing deadline (which is generally on April 15). So you can file your return today, and schedule a future payment for on or before the deadline.
You can also make payments over the Web or use the phone by enrolling in the Electronic Federal Tax Payment System – or EFTPS for short. EFTPS is bill pay for your taxes. You can schedule payments for your balance due, estimated taxes, and monthly installment agreement payments. EFTPS is free.
You can also pay your taxes by credit card. You will need to go through a third-party service, such as Official Payments Corporation and Link2Gov. Both charge a processing fee for setting up your credit card payment. Paying by credit card is a good way to pay off the IRS in full, and then lets you pay off your credit card bill over time.