Individual Income Tax and Form 1040

The Internal Revenue Code sections behind most Form 1040 questions, from taxable income to retirement savings.

Key sections and concepts

Section 61

Gross income

Defines gross income broadly as all income from whatever source derived.

Section 62

Adjusted gross income

Lists the above-the-line deductions used to reach AGI.

Section 63

Taxable income

Defines taxable income and the standard deduction.

Section 24

Child tax credit

Provides the credit for qualifying children and other dependents.

Section 32

Earned income tax credit

Provides a refundable credit for eligible low and moderate income workers.

Section 55

Alternative minimum tax

Imposes a parallel tax calculation reported on Form 6251.

Section 72(t)

Early distribution tax

Adds a tax on many early retirement plan distributions, subject to exceptions.

Section 86

Social Security benefits

Determines how much of Social Security benefits is taxable.

Section 121

Home sale exclusion

Excludes part of the gain on a qualifying sale of a principal residence.

Section 408 and 408A

Traditional and Roth IRAs

Sets the rules for IRA contributions, distributions, and Roth treatment.

Section 469

Passive activity losses

Limits the use of passive losses against other income.

Section 529

Education savings plans

Covers tax-favored qualified tuition programs.

Section 1411

Net investment income tax

Imposes an additional tax on investment income above set thresholds.

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For general education only, not tax advice. Tax law changes often, so confirm current rules and amounts with primary sources.