Topic 4 Tax Return Tutorial: The First Step In Preparing ✓ Solved

Topic 4 Tax Return Tutorial. The first step in preparing t

Topic 4 Tax Return Tutorial. The first step in preparing a tax return is to determine what type of return you are preparing. The four main types of returns are: individual (Form 1040), corporation (Form 1120), S corporation (Form 1120-S), and partnership (Form 1065). This tutorial is for an individual income tax return (Form 1040).

Step 1: Refer to the assignment details in the digital classroom to determine which tax forms you need. Download the applicable tax return forms from the Internal Revenue Service website. Use the current year menu option to find forms if you are completing the tax return assignment during the Fall semester. If you are completing the tax return assignment during the Spring semester you will need to use the prior year menu option to locate the correct year for the tax forms.

Step 2: Review the instructions in the learning management system to determine the assigned item from the textbook.

Step 3: Refer to the check figures document located in the learning management system for any potential additional information about which boxes to check and schedules to complete. Refer to the syllabus for any supplementary information necessary to properly prepare the tax forms, e.g. Form 8949.

Step 4: Review all of the information provided in the textbook, syllabus, or check figure documents to determine all of the applicable details for the individual taxpayer(s). Determine which items are treated as income versus deductions. Generally, Form 1040 will be prepared last as most of the information from the other forms flows to the Form 1040. However, some forms require the AGI value from Form 1040. Try to complete as many of the other tax forms as you can as the amounts flow from various forms to page 1 of Form 1040.

Step 5: Separate the income and expenses based on the applicable form on which it is reported (Note: Not all forms may be required for an assignment): Schedule 1 reports: additional income and “for AGI” deductions. Include any amounts associated with the taxpayer(s) sole proprietorship, as applicable. The subtotals on this form flow to Form 1040, page 1. Schedule 2 reports: other taxes, such as SE tax. The subtotals on this form flow to Form 1040, page 2. Schedule A reports: itemized deductions. The four main categories of itemized deductions are: medical, state taxes, interest, and charitable contributions. The interest section of Schedule 1 includes mortgage interest and investment interest expense. The subtotal on this form flows to Form 1040, page 1. Schedule B reports: interest income and dividend income. The subtotals on this form flow to Form 1040, page 1. Note: Use the Schedule B for Form 1040 as there are multiple versions of Schedule B forms depending on the entity type. Schedule C reports: activity of a sole proprietor. Complete the information at the top of the form for the taxpayer who is the sole proprietor. Indicate items such as the address and type of accounting method (generally cash basis). Complete the income and expense sections based on the data provided in the textbook problem. You may need to complete page 2 for any business use of an auto. The income from the Schedule C flows to page 1 of Form 1040 as well as to the Schedule SE to calculate self-employment tax. Schedule D reports: capital gains from sale of stock (summary). Determine if the additional detail provides information about any carryover losses and include that information on the applicable line of Schedule D. The subtotals on this form flow to Form 1040, page 1. Note: Use the Schedule D for Form 1040 as there are multiple versions of Schedule D forms depending on the entity type. Form 8949 reports: details from capital gain transactions. The subtotals on both pages of this form flow to Schedule D, page 1. Schedule E reports: rental real estate (page 1), S corporation income/expense (page 2). The subtotal on this form flows to Form 1040, page 1. Form 8995 (qualified business income deduction). Refer to the instructions for Form 8995 to determine the amounts to include as Qualified Business Income as well as any applicable deductions in calculating the overall QBI deduction.

Step 6: Compress the file as per the instructions provided in the digital classroom prior to uploading to the gradebook. Remember to use the appropriate year tax forms, as directed in the assignment. Points will be deducted for incorrect forms and incorrect sequence. In addition, be sure to submit the tax forms in order as required by the IRS. You will notice a Sequence No. on the top right of each tax return form except for the Form 1040. Form 1040 is the first form in the sequence.

Paper For Above Instructions

Tax return preparation is a structured process that begins with recognizing the correct form for the taxpayer’s situation. For individuals, the Form 1040 is the central document into which all other schedules flow, yet the creation of a complete return often begins with identifying the ancillary forms that capture specific categories of income, deductions, and credits. The logic behind this sequencing is practical: specialized forms gather precise data (for example, business income on Schedule C or capital gains on Schedule D), and their totals feed into AGI and the final tax computation on Form 1040. This modular approach serves both accuracy and auditability, since it allows the preparer to trace each number back to the source documents and schedules (IRS, 2024 Form 1040 Instructions).

In practice, Step 1 in this tutorial emphasizes form selection and year relevance. The year is critical because tax laws and form versions change; using an incorrect year can lead to mismatched data fields, missing schedules, and an incorrect AGI. The IRS publishes year-specific instructions and forms online, and the LMS guidance helps align the assignment with course expectations (IRS, 2024 Form 1040 Instructions; IRS, 2024 Schedule C Instructions). The emphasis on using the current year for Fall vs prior year for Spring ensures students practice with the correct forms for the assessment window, which also mirrors real-world filing practices when deadlines and forms shift between tax years (IRS, 2024 Form 1040 Instructions).

Step 2 highlights consulting the course materials to determine the specific item from the textbook. In real filing, taxpayers often rely on authoritative sources such as the textbook or official guidance alongside the practitioner notes provided by instructors. The concept of cross-checking instructions reduces errors by clarifying which forms are required for the scenario (IRS, 2024 Form 1040 Instructions). Step 3 then directs the student to a check figures document and syllabus for supplementary details, a common practice in academic simulations to ensure alignment with problem-specific assumptions (IRS, 2024 Schedule A Instructions). The Form 8949 reference emphasizes capital gains details, which appear across Form 8949 and Schedule D, and demonstrates why linked forms are necessary in full-year returns (IRS, 2024 Form 8949 Instructions).

Step 4 stresses verifying all data from textbooks or problem sets to correctly categorize items as income or deductions. This step reinforces the principle that the Form 1040 typically collects information from other schedules, with some forms requiring AGI from Form 1040 (IRS, 2024 Form 1040 Instructions). The AGI serves as a threshold for phase-outs and credits, so accurate transfer of numbers from schedules to Form 1040 is essential (IRS Pub 17). Step 5 then details the data flow across Schedules 1, 2, A, B, C, D, E, and 8995. Each schedule has a specialized role: Schedule 1 for additional income and AGI deductions, Schedule 2 for other taxes such as SE tax, Schedule A for itemized deductions, Schedule B for interest and dividends, Schedule C for sole proprietorship income and expenses, Schedule D and Form 8949 for capital gains, Schedule E for rental activity and pass-through entities, and Form 8995 for QBI deductions. Understanding the flow of numbers from these schedules into Form 1040 is foundational to accurate tax reporting (IRS, 2024 Schedule A Instructions; IRS, 2024 Schedule B Instructions; IRS, 2024 Schedule C Instructions; IRS, 2024 Schedule D Instructions; IRS, 2024 Form 8949 Instructions; IRS, 2024 Schedule E Instructions; IRS, 2024 Form 8995 Instructions).

Step 6 addresses the administrative procedure of submitting the prepared file, emphasizing that the year and sequence of forms matter, and that Form 1040 is the first form in the sequence. This reflects both the IRS filing logic and the classroom sequencing of problems (IRS, 2024 Form 1040 Instructions). In a real-world context, documentation sequencing helps ensure the return is coherent and auditable, especially when schedules contain carryovers or additional details that feed into the main form (IRS Pub 17). The entire process, from form selection to data transfer and final submission, echoes the standard practice in individual tax return preparation and demonstrates how disciplined workflow minimizes errors and improves accuracy (IRS, 2024 Form 1040 Instructions).

In sum, the tutorial provides a structured map for preparing an individual tax return, focusing on choosing the correct form, collecting the necessary schedules, and understanding how data flows into Form 1040. The emphasis on year accuracy, proper sequencing, and cross-checking aligns with best practices in tax preparation and educational simulations. By following these steps, a preparer develops a defensible, well-documented return that can withstand review and reflects a thorough understanding of how the forms interact to compute AGI, taxable income, and tax liability (IRS, 2024 Form 1040 Instructions; IRS, 2024 Schedule C Instructions; IRS, 2024 Schedule D Instructions).

References

• Internal Revenue Service (IRS). Form 1040 Instructions. 2024.
• Internal Revenue Service (IRS). Schedule A (Itemized Deductions) Instructions. 2024.
• Internal Revenue Service (IRS). Schedule B (Interest and Ordinary Dividends) Instructions. 2024.
• Internal Revenue Service (IRS). Schedule C (Profit or Loss from Business) Instructions. 2024.
• Internal Revenue Service (IRS). Schedule D (Capital Gains and Losses) Instructions. 2024.
• Internal Revenue Service (IRS). Form 8949 Instructions. 2024.
• Internal Revenue Service (IRS). Schedule E (Supplemental Income and Loss) Instructions. 2024.
• Internal Revenue Service (IRS). Form 8995 Instructions. 2024.
• Internal Revenue Service (IRS). Publication 17: Your Federal Income Tax. 2024 edition.
• Tax Foundation. The Form 1040 and Schedules: A Guide for the 2024 Tax Year. 2024.