Module 4: Complete a Basic Tax Return

Paul's tax return explained - Page 3

Page 9 of 13

To begin, Paul copies the amount he entered on line 150 (on page 2) to line 150 on page 3. Following line 150 (on page 3), are a series of lines where Paul could enter deductions to be used in calculating his net income.

For more information on deductions, click on What you can deduct.

However, Paul does not have any deductions for last year and so does not enter any information until line 234.

Now Paul completes line 234. To do so, he enters the amount from line 150 minus the amount on line 233. Since there is no information to enter on line 233, because he has no deductions, the amount of $6,200, from line 150, does not change.

He now enters the same amount on line 236. This is Paul's net income for last year.

The next section of page 3 is called "Taxable income." No deductions in this section apply to Paul. Since he has not claimed any deductions, he enters the amount from line 236 on line 260.

The amount that Paul has entered on line 260, $6,200, represents his taxable income for last year.

Paul is almost ready to complete page 4 of his return.

Before he can do so, he will need to complete a Schedule 1 for federal tax. He will calculate his federal tax on Schedule 1 and enter the result on page 4 of his tax return.

He will need to attach the completed Schedule 1 to his tax return when he files it.

So, now lets take a look at Paul's Schedule 1.

Paul's tax return explained - Page 3

Page 9 of 13