Refer to the 2018 tax Form 1040 and give an example of what type of income would be found on Lines 1 thru 5. Identify how the IRS taxes the specific income.
Refer to the 2018 tax Form 1040 and give an example of what type of income would be found on Lines 1 thru 5. Identify how the IRS taxes the specific income.
ANSWER:-
Form 1040 is an individual tax return form used by the IRS to report an individual's annual income.
Here's an example of the type of income that would be found on Lines 1 through 5 of the 2018 Form 1040:
Line 1:- Wages, salaries, tips, etc. - This type of income is considered taxable and is subject to federal income tax withholding by an employer. The amount is reported on the W-2 form issued by the employer.
Line 2:- Taxable interest - Interest earned on bank deposits, bonds, and some other investments is considered taxable and is reported to the IRS on a 1099-INT form. The taxpayer must pay federal income tax on this type of income.
Line 3 :-Ordinary dividends - Dividends from stocks, mutual funds, and other investments are considered taxable and are reported to the taxpayer on a 1099-DIV form. The taxpayer must pay federal income tax on this type of income.
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