2019 Instruction 1040

1040 (and

1040-SR) TAX YEAR

2021

R

INSTRUCTIONS Including the instructions for Schedules 1 through 3

American Rescue Plan (ARP) of 2021. The following ARP provisions affect tax year 2021.

? Child and dependent care credit increased.

? Self-only EIC expanded.

2021 Changes

? Child tax credit expanded. Advance payments of the child tax credit were made in 2021.

For details on these and other changes, see What's New in these instructions.

Future Developments

See and Forms, and for the latest information about developments related to Forms 1040 and 1040-SR and their instructions, such as legislation enacted after they were published, go to Form1040.

Free File is the fast, safe, and free way to prepare and e-file your taxes. See FreeFile.

Pay Online. It's fast, simple, and secure. Go to Payments.

Department of the Treasury Internal Revenue Service

Dec 21, 2021

Cat. No. 24811V

Department of the Treasury Internal Revenue Service

Table of Contents

Contents

Page

What's New . . . . . . . . . . . . . . . . . . . . . . . . 6

Filing Requirements . . . . . . . . . . . . . . . . . . 9 Do You Have To File? . . . . . . . . . . . . . . 9 When and Where Should You File? . . . . . 9

Line Instructions for Forms 1040 and 1040-SR . . . . . . . . . . . . . . . . . . . . . . 13 Filing Status . . . . . . . . . . . . . . . . . . . 13 Name and Address . . . . . . . . . . . . . . . 15 Social Security Number (SSN) . . . . . . . 15 Dependents, Qualifying Child for Child Tax Credit, and Credit for Other Dependents . . . . . . . . . . . . . . 18 Income . . . . . . . . . . . . . . . . . . . . . . . 23 Total Income and Adjusted Gross Income . . . . . . . . . . . . . . . . . . . . . 30 Tax and Credits . . . . . . . . . . . . . . . . . 30 Payments . . . . . . . . . . . . . . . . . . . . . 37 Refund . . . . . . . . . . . . . . . . . . . . . . . 58 Amount You Owe . . . . . . . . . . . . . . . . 61

Contents

Page

Sign Your Return . . . . . . . . . . . . . . . . 63 Assemble Your Return . . . . . . . . . . . . 64

2021 Tax Table . . . . . . . . . . . . . . . . . . . . 65

General Information . . . . . . . . . . . . . . . . . 78

Refund Information . . . . . . . . . . . . . . . . . . 83

Instructions for Schedule 1 . . . . . . . . . . . . . 84

Instructions for Schedule 2 . . . . . . . . . . . . . 96

Instructions for Schedule 3 . . . . . . . . . . . . 101

Tax Topics . . . . . . . . . . . . . . . . . . . . . . 105

Disclosure, Privacy Act, and Paperwork Reduction Act Notice . . . . . . . . . . . . 107

Major Categories of Federal Income and Outlays for Fiscal Year 2020 . . . . . . . 109

Index . . . . . . . . . . . . . . . . . . . . . . . . . . 111

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Form 1040 and 1040-SR Helpful Hints

For 2021, you will use Form 1040 or, if you were born before January 2, 1957, you have the option to use Form 1040-SR.

You may only need to le Form 1040 or 1040-SR and none of the numbered schedules, Schedules 1 through 3. However, if your return is more complicated (for example, you claim certain deductions or credits or owe additional taxes), you will need to complete one or more of the numbered schedules. Below is a general guide to which schedule(s) you will need to le based on your circumstances. See the instructions for the schedules for more information.

If you e-file your return, you generally won't notice much of a change and the software you use will generally determine which schedules you need.

IF YOU...

THEN USE...

Have additional income, such as business or farm income or loss, unemployment compensation, prize or award money, or gambling winnings.

Have any deductions to claim, such as student loan interest, self-employment tax, or educator expenses.

Schedule 1, Part I Schedule 1, Part II

Owe alternative minimum tax (AMT) or need to make an excess advance premium tax credit repayment.

Schedule 2, Part I

Owe other taxes, such as self-employment tax, household employment taxes, additional tax on IRAs or other quali ed retirement plans and tax-favored accounts.

Schedule 2, Part II

Can claim a nonrefundable credit (other than the nonrefundable child tax credit or the credit for other dependents), such as the foreign tax credit, education credits, or general business credit.

Schedule 3, Part I

Can claim a refundable credit (other than the earned income credit, American opportunity credit, refundable child tax credit, additional child tax credit, or recovery rebate credit), such as the net premium tax credit, health coverage tax credit, or quali ed sick and family leave credits from Schedule H or Schedule SE.

Have other payments, such as an amount paid with a request for an extension to le or excess social security tax withheld.

Schedule 3, Part II

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The Taxpayer Advocate Service Is Here To Help You

What is the Taxpayer Advocate Service? The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service (IRS) that helps taxpayers and protects taxpayer rights. TAS strives to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights.

What can TAS do for you? TAS can help you if your tax problem is causing a financial difficulty, you've tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn't working as it should. And the service is free. If you qualify for TAS assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if:

? Your problem is causing a financial difficulty for you, your family, or your business. ? You face (or your business is facing) an immediate threat of adverse action. ? You've tried to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised.

How can you reach TAS? We have offices in every state, the District of Columbia, and Puerto Rico. To find your advocate's number:

? Go to TaxpayerAdvocate.contact-us; ? Download Publication 1546, Taxpayer Advocate Service - We Are Here to Help You, available at Forms-Pubs. If

you do not have internet access, you can call the IRS toll free at 800-829-3676 and ask for a copy of Publication 1546;

? Check your local directory; or ? Call TAS toll free at 877-777-4778.

How can you learn about your taxpayer rights? The Taxpayer Bill of Rights describes ten basic rights that all taxpayers have when dealing with the IRS. The TAS Tax Toolkit at TaxpayerAdvocate. can help you understand what these rights mean to you and how they apply. These are your rights. Know them.

How else does the Taxpayer Advocate Service help taxpayers? TAS works to resolve large-scale problems that affect many taxpayers. If you know of one of these broad issues, please report it to TAS at SAMS. Be sure not to include any personal taxpayer information.

Low Income Taxpayer Clinics Help Taxpayers

Low Income Taxpayer Clinics (LITCs) are independent from the Internal Revenue Service (IRS) and the Taxpayer Advocate Service (TAS). LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page at TaxpayerAdvocate.LITCMap or IRS Publication 4134, Low Income Taxpayer Clinic List. This publication is available online at Forms-Pubs or by calling the IRS toll free at 800-829-3676.

Suggestions for Improving the IRS

Taxpayer Advocacy Panel

Taxpayers have an opportunity to provide direct feedback to the Internal Revenue Service (IRS) through the Taxpayer Advocacy Panel (TAP). The TAP is a Federal Advisory Committee comprised of an independent panel of citizen volunteers who listen to taxpayers, identify taxpayers' systemic issues, and make suggestions for improving IRS customer service. Contact TAP at .

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Affordable Care Act--What You Need To Know

Requirement To Reconcile Advance Payments of the Premium Tax Credit

The premium tax credit helps pay premiums for health insurance purchased from the Marketplace. Eligible individuals may have advance payments of the premium tax credit made on their behalf directly to the insurance company. If you or a family member enrolled in health insurance through the Marketplace and advance payments of the premium tax credit were made to your insurance company to reduce your monthly premium payment, you must attach Form 8962 to your return to reconcile (compare) the advance payments with your premium tax credit for the year. The Marketplace is required to send Form 1095-A by January 31, 2022, listing the advance payments and other information you need to complete Form 8962.

1. You will need Form 1095-A from the Marketplace. 2. Complete Form 8962 to claim the credit and to reconcile your advance credit payments. 3. Include Form 8962 with your Form 1040, Form 1040-SR, or Form 1040-NR. (Don't include Form 1095-A.)

Health Coverage Reporting

If you or someone in your family was an employee in 2021, the employer may be required to send you Form 1095-C. Part II of Form 1095-C shows whether your employer offered you health insurance coverage and, if so, information about the offer. You should receive Form 1095-C by early February 2022. This information may be relevant if you purchased health insurance coverage for 2021 through the Health Insurance Marketplace and wish to claim the premium tax credit on Schedule 3, line 9. However, you don't need to wait to receive this form to file your return. You may rely on other information received from your employer. If you don't wish to claim the premium tax credit for 2021, you don't need the information in Part II of Form 1095-C. For more information on who is eligible for the premium tax credit, see the Instructions for Form 8962. Reminder: Health care coverage. If you need health care coverage, go to to learn about health insurance options for you and your family, how to buy health insurance, and how you might qualify to get

nancial assistance to buy health insurance.

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What's New

For information about any additional changes to the 2021 tax law or any other developments affecting Form 1040 or 1040-SR or the instructions, go to Form1040.

Due date of return. File Form 1040 or 1040-SR by April 18, 2022. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia ? even if you don't live in the District of Columbia. If you live in Maine or Massachusetts, you have until April 19, 2022. That is because of the Patriots' Day holiday in those states.

Tuition and fees deduction not available. The tuition and fees deduction is not available after 2020. Instead, the income limitations for the lifetime learning credit have been increased. See Form 8863 and its instructions.

Economic impact payment--EIP 3. Any economic impact payment you received is not taxable for federal income tax purposes, but will reduce your recovery rebate credit.

2021 Recovery rebate credit. This credit is figured like last year's economic impact payment, EIP 3, except eligibility and the amount of the credit are based on your tax year 2021 information. See the instructions for line 30 and the Recovery Rebate Credit Worksheet to figure your credit amount.

Standard deduction amount increased. For 2021, the standard deduction amount has been increased for all filers. The amounts are:

? Single or Married filing separate-

ly--$12,550.

? Married filing jointly or Qualify-

ing widow(er)--$25,100.

? Head of household--$18,800.

Virtual currency. If, in 2021, you engaged in a transaction involving virtual currency, you will need to answer "Yes" to the question on page 1 of Form 1040 or 1040-SR. See Virtual Currency, later, for information on transactions involving virtual currency. Do not leave this field blank. The question must be answered by all taxpayers, not just taxpayers who engaged in a transaction involving virtual currency.

Credits for sick and family leave for certain self-employed individuals.

The Families First Coronavirus Response Act (FFCRA) helped self-employed individuals affected by coronavirus by providing paid sick leave and paid family leave credits equivalent to those that employers are required to provide their employees for qualified sick leave wages and qualified family leave wages. The COVID-related Tax Relief Act of 2020 extended the period during which individuals can claim these credits. For more information, see the instructions for Form 7202 and Schedule 3, line 13b.

Extension and expansion of credits for sick and family leave. The American Rescue Plan Act of 2021, enacted on March 11, 2021 (ARP) provides that certain self-employed individuals can claim credits for up to 10 days of "paid sick leave," and up to 60 days of "paid family leave," if they are unable to work or telework due to circumstances related to coronavirus. Self-employed individuals may claim these credits for the period beginning on April 1, 2021, and ending September 30, 2021. For more information, see the instructions for Form 7202 and Schedule 3, line 13h.

Form 9000, Alternative Media Preference. Beginning in 2021, taxpayers with print disabilities can use Form 9000, Alternative Media Preference, to elect to receive notices from the IRS in an alternative format including Braille, large print, audio, and electronic. You can attach Form 9000 to your Form 1040 or 1040-SR or you can mail it separately. For more information, see Form 9000.

All taxpayers now eligible for Identity Protection PIN. Beginning in 2021, the IRS Identity Protection PIN (IP PIN) Opt-In Program has been expanded to all taxpayers who can properly verify their identity. An IP PIN helps prevent your social security number from being used to file a fraudulent federal income tax return. You can use the Get An IP PIN tool on to request an IP PIN, file Form 15227 if your income is

$72,000 or less, or make an appointment to visit a Taxpayer Assistance Center.

Direct deposit now available for returns filed late. You can now receive a direct deposit of your refund even if you file your 2021 return after November 30, 2022.

Expanded dependent care assistance. ARP expanded the child and dependent care tax credit for 2021 by making it refundable for certain taxpayers and making it larger. For 2021, the dollar limit on qualifying expenses increases to $8,000 for one qualifying person and $16,000 for two or more qualifying persons. The rules for calculating the credit have also changed; the percentage of qualifying expenses eligible for the credit has increased, along with the income limit at which the credit begins phasing out. Additionally, for taxpayers who receive dependent care benefits from their employer, the dollar limit of the exclusion amount increases for 2021. For more information, see the Instructions for Form 2441 and Pub. 503.

Child tax credit. Under ARP, the child tax credit has been enhanced for 2021. The child tax credit has been extended to qualifying children under age 18. Depending on modified adjusted gross income, you may receive an enhanced credit amount of up to $3,600 for a qualifying child under age 6 and up to $3,000 for a qualifying child over age 5 and under age 18. The enhanced credit amount begins to phase out where modified adjusted gross income exceeds $150,000 in the case of a joint return or surviving spouse, $112,500 in the case of a head of household, and $75,000 in all other cases.

If you (or your spouse if filing jointly) lived in the United States for more than half the year, the child tax credit will be fully refundable even if you don't have earned income. If you don't meet this residency requirement, your child tax credit will be a combination of a nonrefundable child tax credit and a refundable additional child tax credit, as was the case in 2020. The credit for oth-

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er dependents has not been enhanced and is figured as it was in 2020.

Changes to Schedule 8812. Because of the changes made by ARP, detailed discussion of the child tax credit, and how to figure your child tax credit and credit for other dependents, which were previously part of these instructions, has been moved to the Instructions for Schedule 8812 (Form 1040). If you are claiming the nonrefundable child tax credit, refundable child tax credit, additional child tax credit, or credit for other dependents, complete Schedule 8812 and attach it to your Form 1040 or 1040-SR.

Premium tax credit (PTC). ARP expanded the PTC by eliminating the limitation that a taxpayer's household income may not exceed 400% of the Federal Poverty Line and generally increases the credit amounts. In addition, in 2021, if you receive unemployment compensation, you are generally eligible to claim the PTC if you meet the other requirements. For more information, see Pub. 974 and Form 8962 and its instructions.

Changes to the earned income credit (EIC). For 2021, the following changes have been made to the EIC.

? EIC rules for taxpayers without

a qualifying child. Special rules apply if you are claiming the EIC without a qualifying child. In these cases, the minimum age has been lowered to age 19 except for specified students who must be at least age 24 at the end of the year. However, the applicable minimum age is lowered further for former foster youth and qualified homeless youth to age 18. Additionally, you no longer need to be under age 65 to claim the EIC without a qualifying child.

? EIC rules for taxpayers with a

qualifying child. If you are claiming the

EIC with a qualifying child, you should follow the rules that apply to filers with a qualifying child or children when determining whether you are eligible to claim the EIC even if your qualifying child hasn't been issued a valid SSN on or before the due date of your return (including extensions). However, when determining the amount of EIC that you are eligible to claim on your return, you should follow the rules that apply to taxpayers who do not have a qualifying child.

? Phaseout amounts increased.

The amount of the credit has been increased and the phaseout income limits at which you can claim the credit have been expanded.

? Rules for separated spouses. If

you are married but don't file a joint return, you may qualify to claim the EIC if you live with a qualifying child for more than half the year and either live apart from your spouse for the last 6 months of 2021 or are legally separated according to your state law under a written separation agreement or a decree of separate maintenance and do not live in the same household as your spouse at the end 2021.

? Investment income limit in-

creased. The amount of investment income you can receive and still be eligible to claim the EIC has increased to $10,000.

? Prior year (2019) earned income.

You can elect to use your 2019 earned income to figure your 2021 earned income credit if your 2019 earned income is more than your 2021 earned income. See the instructions for line 27a.

File Schedule EIC (Form 1040) if you have a qualifying child. If you have at least one child who meets the conditions to be your qualifying child for purposes

of claiming the EIC, complete and attach Schedule EIC to your Form 1040 or 1040-SR even if that child doesn't have a valid SSN. For more information, including how to complete Schedule EIC if your qualifying child doesn't have a valid SSN, see the line 27a instructions and Schedule EIC.

Forgiveness of Paycheck Protection Program (PPP) Loans. The forgiveness of a PPP Loan creates tax-exempt income, so you don't need to report the income on Form 1040 or 1040-SR, but you do need to report certain information related to your PPP Loan. To find out how to report information related to your PPP Loan, see Forgiveness of Paycheck Protection Program (PPP) Loans, under Income, later.

Identity verification. The IRS launched an improved identity verification and sign-in process that enables more people to securely access and use IRS online tools and applications. To provide verification services, the IRS is using ID.me, a trusted technology provider. The new process is one more step the IRS is taking to ensure that taxpayer information is provided only to the person who legally has a right to the data. Taxpayers using the new mobile-friendly verification procedure can gain entry to existing IRS online services such as the Child Tax Credit Update Portal, Online Account, Get Transcript Online, Get an Identity Protection PIN (IP PIN), and Online Payment Agreement. Additional IRS applications will transition to the new method over the next year. Each online service will also provide information that will instruct taxpayers on the steps they need to follow for access to the service. You can also see IR-2021-228 for more information.

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Free Software Options for Doing Your Taxes

Why have 49 million Americans used Free File?

? Security--Free File uses the latest encryption technology to safeguard your information. ? Flexible Payments--File early; pay by April 18, 2022 (for most people). ? Greater Accuracy--Fewer errors mean faster processing. ? Quick Receipt--Get an acknowledgment that your return was received and accepted. ? Go Green--Reduce the amount of paper used. ? It's Free--through FreeFile. ? Faster Refunds--Join the eight in 10 taxpayers who get their refunds faster by using

direct deposit and e- le.

Do Your Taxes for Free

If your adjusted gross income was $73,000 or less in 2021, you can use free tax software to prepare and e- le your tax return. Earned more? Use Free File Fillable Forms. Free File. This public?private partnership, between the IRS and tax software providers, makes approximately a dozen brand-name commercial software products and e- le available for free. Seventy percent of the nation's taxpayers are eligible. Just visit FreeFile for details. Free File combines all the bene ts of e- le and easy-to-use software at no cost. Guided questions will help ensure you get all the tax credits and deductions you are due. It's fast, safe, and free. You can review each software provider's criteria for free usage or use an online tool to nd which free software products match your situation. Some software providers offer state tax return preparation for free. Free File Fillable Forms. The IRS offers electronic versions of IRS paper forms that can also be e- led for free. Free File Fillable Forms is best for people experienced in preparing their own tax returns. There are no income limitations. Free File Fillable Forms does basic math calculations. It supports only federal tax forms.

Free Tax Help Available Nationwide

Volunteers are available in communities nationwide providing free tax assistance to low-to-moderate income (generally under $58,000 in adjusted gross income) and elderly taxpayers (age 60 and older). At selected sites, taxpayers can input and electronically le their own tax return with the assistance of an IRS-certi ed volunteer. See How To Get Tax Help near the end of these instructions for additional information or visit (Keyword: VITA) for a VITA/TCE site near you!

is the gateway to all electronic services offered by the IRS, as well as the spot to download forms at Forms.

Make your tax payments online--it's easy.

You can make payments online, by phone, or from a mobile device. Paying online is safe and secure; it puts you in control of paying your tax bill and gives you peace of mind. You determine the payment date, and you will receive an immediate con rmation from the IRS. Go to Payments to see all your online payment options.

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