How is the income tax return calculated?
Calculating the tax return requires entering your tax information on a 1040, 1040A or 1040EZ tax form and taking deduction and/or credits that pertain to your tax situation for the tax year.ExemptionsExemptions are entered and used for calculating the credit amount you are allowed on line 42 of the 1040. You enter yourself, spouse and any qualifying dependants.IncomeAll income is entered and added up on line 22 of a 1040 form. You enter W-2 forms, 1099 forms and alimony received. Income is profit and loss, capital gains, distributions and unemployment.DeductionsDeductions to your income are figured in the section adjust gross income. You can deduct alimony paid, health savings account, IRA deductions, educator expenses, interest on student loans and any other deductions that apply. On line 37 of the 1040, you will have your adjusted gross income and is used for your state income.Credits and TaxThe adjusted gross income is reduced more in the section credits and tax. You can deduct item
