Form 1040 (2020) Preparation Checklist
Purpose and Overview
Form 1040 is used to report the 2020 U.S. individual income tax. The 2020 tax year includes several notable provisions: the Recovery Rebate Credit on line 30 for reconciling Economic Impact Payments, a new above-the-line charitable contribution deduction for non-itemizers on line 10b, the qualified business income deduction using Form 8995 or 8995-A, and a mandatory virtual currency disclosure question prominently placed on the form.
Step-by-Step Preparation Guide
Step 1: Verify Personal Information and Filing Status
Enter your name, Social Security Number, and current address on the form. Verify your filing status eligibility: single, married filing jointly, married filing separately, head of household, or qualifying widow(er). If you are filing as married filing separately, you must include your spouse’s name. For head of household or qualifying widow(er) status, identify the qualifying person. Complete the foreign address section if applicable.
Step 2: Answer the Virtual Currency Question
At the top of the form, answer the virtual currency question: “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” Check yes or no. This question is required for all taxpayers regardless of transaction amount. Answer yes if you engaged in any virtual currency transaction, including receiving, selling, sending, exchanging, or acquiring a financial interest in cryptocurrency.
Step 3: Determine Your Standard Deduction
Calculate your standard deduction based on your 2020 filing status. Standard deduction amounts are $12,400 for single filers, $24,800 for married filing jointly, $5 for married filing separately if your spouse itemizes, $18,650 for head of household, and $24,800 for a qualifying widow(er). Check the appropriate box if you or your spouse was born before January 2, 1956, which qualifies you as being 65 years old or older for additional deduction amounts. Check the box if you or your spouse is blind, which also increases your standard deduction.
Step 4: List All Dependents
List each dependent’s full name, Social Security Number, and relationship to you. Check the appropriate box for the Child Tax Credit if the dependent is under age 17 at the end of 2020 and meets the citizenship and residency requirements. Check the box for credit for other dependents if you don’t qualify for the child tax credit. Attach an additional schedule if you have more than four dependents.
Step 5: Report All Income Sources
Enter wages from line 1 and attach all Forms W-2. Report tax-exempt interest on line 2a and taxable interest on line 2b. Enter qualified dividends on line 3a and ordinary dividends on line 3b. Report IRA distributions on line 4a with the taxable portion on line 4b. Enter pensions and annuities on line 5a with the taxable portion on line 5b. Report Social Security benefits on line 6a with the taxable portion on line 6b. Include capital gains or losses from Schedule D on line 7. Enter additional income from Schedule 1, line 9, on line 8.
Step 6: Calculate Adjustments to Income
Enter adjustments from Schedule 1, line 22, on line 10a. For line 10b, enter your above-the-line charitable contribution deduction if you are taking the standard deduction rather than itemizing. The maximum amounts are $300 for single filers, $300 for head of household or qualifying widow(er) filers, $600 for married filing jointly, and $150 for married filing separately. This deduction applies only to cash contributions to qualifying organizations and is available for the 2020 tax year. Add lines 10a and 10b to calculate your total adjustments on line 10c.
Step 7: Calculate Adjusted Gross Income and Deductions
Subtract total adjustments on line 10c from total income on line 9 to determine your adjusted gross income on line 11. Enter either your standard deduction amount or itemized deductions from Schedule A on line 12. Enter your qualified business income deduction from Form 8995 or 8995-A on line 13. Add lines 12 and 13 to calculate your total deductions on line 14.
Step 8: Calculate Taxable Income and Tax
Subtract total deductions on line 14 from your adjusted gross income on line 11 to determine your taxable income on line 15. Calculate your tax using the tax tables or tax computation worksheet and enter the result on line 16. Add any additional taxes from Schedule 2 line 3 on line 17, which includes alternative minimum tax, net investment income tax, and excess advance premium tax credit repayment. Add lines 16 and 17 for your total tax on line 18.
Step 9: Apply Nonrefundable Credits
Enter your child tax credit or credit for other dependents, on line 19. As of the end of 2020, the Child Tax Credit is available for qualifying children under the age of 17. Add other nonrefundable credits from Schedule 3, line 7, on line 20. Add lines 19 and 20 to calculate total credits. Subtract total credits from line 18 tax. If the result is negative, enter zero on line 22.
Step 10: Calculate Total Tax and Withholding
Add other taxes from Schedule 2 line 10 on line 23, which includes self-employment tax, household employment taxes, and additional taxes on retirement plans. Add lines 22 and 23 to determine your total tax on line 24. Enter federal income tax withheld from Forms W-2 on line 25a, from Forms 1099 on line 25b, and from other forms on line 25c. Add these amounts to the total federal income tax withheld on line 25d.
Step 11: Report Estimated Payments
Enter your 2020 estimated tax payments and any amount applied from your 2019 return on line 26. Include all quarterly estimated payments made during 2020. This line now appears directly on Form 1040 rather than Schedule 3, as in prior years.
Step 12: Claim Refundable Credits
Enter the earned income credit on line 27, attaching Schedule EIC if you have a qualifying child. Report the additional child tax credit from Schedule 8812 on line 28. Enter the American opportunity credit from Form 8863 line 8 on line 29. Calculate and enter your Recovery Rebate Credit on line 30, which reconciles Economic Impact Payments you received or were eligible to receive during 2020. Enter other refundable credits from Schedule 3, line 13, on line 31, which may include net premium tax credit, health coverage tax credit, or qualified sick and family leave credits.
Step 13: Calculate Your Refund or Amount Owed
Add all payments and refundable credits from lines 25d and 26 through 31 to determine your total payments on line 33. If line 33 is larger than line 24, subtract line 24 from line 33 to calculate your refund on line 34. If you are receiving a refund, complete lines 35a through 35d for direct deposit information or leave blank to receive a paper check. If line 24 is larger than line 33, subtract line 33 from line 24 to determine the amount you owe on line 37. Make payment by the return due date to avoid interest and penalties.
Step 14: Review, Sign, and File
Review your entire return for accuracy and completeness. Verify all Social Security Numbers, calculations, and attached schedules. Sign and date your return. Your spouse must also sign if filing jointly. If using a paid preparer, ensure they sign and provide their PTIN. Attach all required forms, including W-2s, 1099s, and supporting schedules, in the correct order. File electronically for faster processing and confirmation, or mail to the appropriate IRS address based on your state of residence and whether you are enclosing payment.
Important Reminders
The filing deadline for the 2020 Form 1040 was extended to May 17, 2021. If you qualified for an automatic extension, your deadline was October 15, 2021. You are considered age 65 at the end of 2020 if you were born before January 2, 1956. The Recovery Rebate Credit reduces your tax or increases your refund, but is reduced by any Economic Impact Payments you already received. The $300 charitable contribution deduction for married filing jointly filers is not doubled; both spouses combined can only deduct up to $300 total for 2020.
Special Considerations
If advance payments of the premium tax credit were made for health insurance purchased through the Marketplace, you must file Form 8962 to reconcile these payments even if you would not otherwise be required to file a return. Self-employed individuals with net earnings of $400 or more must file and may be eligible to defer 50% of social security tax from March 27 through December 31, 2020.
Unemployment compensation up to $10,200 may be excluded from income if your modified adjusted gross income is less than $150,000, and this exclusion applies separately to each spouse on a joint return. Some credits allow you to elect to use your 2019 earned income instead of your 2020 earned income for calculation purposes, which may result in a larger credit amount.
Need Help With Your Tax Filing?
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
We offer:
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Call now before filing: (888) 260-9441
Fast transcript pull available
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
