Part Four. — Publication 17 — Your Federal Income Tax

Introduction

After you have figured your income and deductions, your next step is to figure your tax. This chapter discusses:

The general steps you take to figure your tax,
An additional tax you may have to pay called the alternative minimum tax (AMT), and
The conditions you must meet if you want the IRS to figure your tax.

Useful Items You may want to see:

Publication

1116

3800

4136

4970

5329

5695

5884

8396

8801

8835

8839

8846

8853

8880

8889

8910

8912

8936

8959

8960

8962

The two chapters in this part explain how to figure your tax. They also discuss tax credits that, unlike deductions, are subtracted directly from your tax and reduce your tax dollar for dollar.

The Form 1040 and 1040-SR schedules that are discussed in these chapters are:

• Schedule 1, Additional Income and Adjustments to Income;

• Schedule 2, Additional Taxes; and

• Schedule 3, Additional Credits and Payments.

Form (and Instructions)

W-2

W -2 age and Tax Statement

Schedule R (Form 1040) Schedule R (Form 1040) Credit for the

Elderly or the Disabled

Schedule SE (Form 1040) Schedule SE (Form 1040)

Self-Employment Tax

Schedule 8812 (Form 1040) Schedule 8812 (Form 1040) Credits for

Qualifying Children and Other Dependents

Figuring Your Tax

Your income tax is based on your taxable income. After you figure your income tax and AMT, if any, subtract your tax credits and add any other taxes you may owe. The result is your total tax. Compare your total tax with your total payments to determine whether you are entitled to a refund or must make a payment.

This section provides a general outline of how to figure your tax. You can find step-by-step directions in the Instructions for Form 1040.

Tax. Most taxpayers use either the Tax Table or the Tax Computation Worksheet to figure their income tax. However, there are special methods if your income includes any of the following items.

A net capital gain. See Pub. 550.
Qualified dividends taxed at the same rates as a net capital gain. See Pub. 550.
Lump-sum distributions. See Pub. 575.
Farming or fishing income. See Schedule J (Form 1040).
Tax for certain children who have unearned income. See Form 8615.
Parent’s election to report child’s interest and dividends. See Form 8814.
Foreign earned income exclusion or the housing exclusion. (See Form 2555, Foreign Earned Income, and the Foreign Earned Income Tax Worksheet in the Instructions for Form 1040.)

Credits. After you figure your income tax and any AMT (discussed later), determine if you are eligible for any tax credits. Eligibility information for these tax credits is discussed in other publications and your form instructions. The following items are some of the credits you may be able to subtract from your tax and shows where you can find more information on each credit.

Adoption credit. See Form 8839.
Alternative motor vehicle credit. See Form

Child and dependent care credit. See Pub.

Child tax credit. See Schedule 8812 (Form 1040).

Schedule 8812 (Form 1040) Schedule 8812 (Form 1040) Credits for

Qualifying Children and Other Dependents

1116 Foreign Tax Credit

3800 General Business Credit

4136 Credit for Federal Tax Paid on Fuels

4970 Tax on Accumulation Distribution of Trusts

5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts

5695 Residential Energy Credits

5884 Work Opportunity Credit

8396 Mortgage Interest Credit

8801 Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts

8835 Renewable Electricity Production Credit

8839 Qualified Adoption Expenses

8846 Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips

8853 Archer MSAs and Long-Term Care Insurance Contracts

8880 Credit for Qualified Retirement Savings Contributions

8889 Health Savings Accounts (HSAs)

8910 Alternative Motor Vehicle Credit

8912 Credit to Holders of Tax Credit Bonds

8936 Clean Vehicle Credits

8959 Additional Medicare Tax

8960 Net Investment Income Tax—Individuals, Estates, and Trusts

8962 Premium Tax Credit (PTC)

503

505

525

531

550

560

575

596

926

969

970

974

503 Child and Dependent Care Expenses

505 Tax Withholding and Estimated Tax

525 Taxable and Nontaxable Income

531 Reporting Tip Income

550 Investment Income and Expenses

560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)

575 Pension and Annuity Income

596 Earned Income Credit (EIC)

926 Household Employer’s Tax Guide

969 Health Savings Accounts and Other Tax-Favored Health Plans

970 Tax Benefits for Education

974 Premium Tax Credit (PTC)

106 Chapter 13 How To Figure Your Tax Publication 17 (2025)

Credit for employer social security and Medicare taxes paid on certain employee tips. See Form 8846.
Credit to holders of tax credit bonds. See Form 8912.
Education credit. See Pub. 970.
Elderly or disabled credit. See Schedule R (Form 1040).
Foreign tax credit. See Form 1116.
General business credit. See Form 3800.
Mortgage interest credit. See Form 8396.
Clean vehicle credits. See Form 8936.
Premium tax credit. See Pub. 974.
Prior year minimum tax credit. See Form

Renewable electricity production credit. See Form 8835.
Residential clean energy credit. See Form

Retirement savings contribution credit. See Form 8880.
Work opportunity credit. See Form 5884.

Some credits (such as the earned income credit) aren’t listed because they are treated as payments. See Payments, later.

Other taxes. After you subtract your tax credits, determine whether there are any other taxes you must pay. This chapter doesn’t explain these other taxes. You can find that information in other publications and your form instructions. See the following list for other taxes you may need to add to your income tax.

Additional Medicare tax. See Form 8959.
Additional tax on ABLE accounts. See Pub. 969.
Additional tax on Archer MSAs and long-term care insurance contracts. See Form 8853.
Additional tax on Coverdell ESAs. See Form 5329.
Additional tax on HSAs. See Form 8889.
Additional tax on income you received from a nonqualified deferred compensation plan that fails to meet certain requirements. See the Instructions for Form 1040.
Additional tax on qualified plans and other tax-favored accounts. See Form 5329.
Additional tax on qualified retirement plans and IRAs. See Form 5329.
Additional tax on qualified tuition programs. See Pub. 970.
Excise tax on insider stock compensation from an expatriated corporation. See the Instructions for Form 1040.
Household employment taxes. See Pub.

Interest on the deferred tax on gain from certain installment sales with a sales price over $150,000. See the Instructions for Form 1040.
Interest on the tax due on installment income from the sale of certain residential

lots and timeshares. See the Instructions for Form 1040.

Net investment income tax. See Form

Recapture of an education credit. See Pub.

Recapture of other credits. See the Instructions for Form 1040.
Section 72(m)(5) excess benefits tax. See Pub. 560.
Self-employment tax. See Schedule SE (Form 1040).
Social security and Medicare tax on tips. See Pub. 531.
Social security and Medicare tax on wages. See Pub. 525.
Tax on accumulation distribution of trusts. See Form 4970.
Tax on golden parachute payments. See the Instructions for Form 1040.
Uncollected social security and Medicare tax on group-term life insurance. See Form W-2.
Uncollected social security and Medicare tax on tips. See Pub. 531.

You may also have to pay AMT (discussed later in this chapter).

Payments. After you determine your total tax, figure the total payments you have already made for the year. Include credits that are treated as payments. This chapter doesn’t explain these payments and credits. You can find that information in other publications and your form instructions. See the following list of payments and credits that you may be able to include in your total payments.

Additional child tax credit. See Schedule 8812 (Form 1040).
American opportunity credit. See Pub. 970.
Credit for federal tax on fuels. See Form

Credit for tax on undistributed capital gain. See the Instructions for Form 1040.
Earned income credit. See Pub. 596.
Estimated tax paid. See Pub. 505.
Excess social security and RRTA tax withheld. See the Instructions for Form 1040.
Federal income tax withheld. See Pub.

Net premium tax credit. See the Instructions for Form 8962 or the Instructions for Form 1040.
Qualified sick and family leave credits. See the Instructions for Form 1040.
Tax paid with extension. See the Instructions for Form 1040.

Refund or balance due. To determine whether you are entitled to a refund or whether you must make a payment, compare your total payments with your total tax. If you are entitled to a refund, see your form instructions for information on having it directly deposited into one or more of your accounts (including a traditional IRA, Roth IRA, or a SEP-IRA).

Alternative Minimum Tax (AMT)

This section briefly discusses an additional tax you may have to pay.

The tax law gives special treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. Taxpayers who benefit from this special treatment may have to pay at least a minimum amount of tax through an additional tax called AMT.

You may have to pay the AMT if your taxable income for regular tax purposes, combined with certain adjustments and tax preference items, is more than a certain amount. See Form 6251, Alternative Minimum Tax—Individuals.

Adjustments and tax preference items. The more common adjustments and tax preference items include:

Addition of enhanced senior deduction;
Addition of the standard deduction (if claimed);
Addition of itemized deductions claimed for state and local taxes and certain interest;
Subtraction of any refund of state and local taxes included in gross income;
Changes to accelerated depreciation of certain property;
Difference between gain or loss on the sale of property reported for regular tax purposes and AMT purposes;
Addition of certain income from incentive stock options;
Change in certain passive activity loss deductions;
Addition of certain depletion that is more than the adjusted basis of the property;
Addition of part of the deduction for certain intangible drilling costs; and
Addition of tax-exempt interest on certain private activity bonds.

More information. For more information about the AMT, see the Instructions for Form 6251.

Tax Figured by the IRS

If you file by the due date of your return (not counting extensions)—April 15, 2026, for most people—you can have the IRS figure your tax for you on Form 1040 or 1040-SR.

If the IRS figures your tax and you paid too much, you will receive a refund. If you didn’t pay enough, you will receive a bill for the balance. To avoid interest or the penalty for late payment, you must pay the bill within 30 days of the date of the bill or by the due date for your return, whichever is later.

The IRS can also figure the credit for the elderly or the disabled and the earned income credit for you.

When the IRS cannot figure your tax. The IRS can’t figure your tax for you if any of the following apply.

Publication 17 (2025) Chapter 13 How To Figure Your Tax 107

You want your refund directly deposited into your checking or savings account.
You want any part of your refund applied to your 2026 estimated tax.
You had income for the year from sources other than wages, salaries, tips, interest, dividends, taxable social security benefits, unemployment compensation, IRA distributions, pensions, and annuities.
Your taxable income is $100,000 or more.
You itemize deductions.
You file any of the following forms.

a. Form 2555, Foreign Earned Income.

b. Form 4137, Social Security and Medi care Tax on Unreported Tip Income.

c. Form 4970, Tax on Accumulation Dis tribution of Trusts.

d. Form 4972, Tax on Lump-Sum Distri butions.

e. Form 6198, At-Risk Limitations.

f. Form 6251, Alternative Minimum

Tax—Individuals.

g. Form 8606, Nondeductible IRAs.

h. Form 8615, Tax for Certain Children

Who Have Unearned Income.

i. Form 8814, Parents’ Election To Re port Child’s Interest and Dividends.

j. Form 8839, Qualified Adoption Ex penses.

k. Form 8853, Archer MSAs and

Long-Term Care Insurance Contracts.

l. Form 8889, Health Savings Accounts

(HSAs).

m. Form 8919, Uncollected Social Secur ity and Medicare Tax on Wages.

Filing the Return

After you complete the line entries for the tax form you are filing, fill in your name and address. Enter your social security number in the space provided. If you are married, enter the social security numbers of you and your spouse, even if you file separately. Sign and date your return and enter your occupation(s). If you are filing a joint return, both you and your spouse must sign it. Enter your daytime phone number in the space provided. This may help speed the processing of your return if we have a question that can be answered over the phone. If you are filing a joint return, you may enter either your or your spouse’s daytime phone number.

If you want to allow your preparer, a friend, a family member, or any other person you choose to discuss your 2025 tax return with the IRS, check the “Yes” box in the “Third Party Designee” area on your return. Also, enter the designee’s name, phone number, and any five digits the designee chooses as their personal identification number (PIN). If you check the “Yes” box, you, and your spouse if filing a joint return, are authorizing the IRS to call the designee to answer any questions that may arise during the processing of your return.

Fill in and attach any schedules and forms asked for on the lines you completed to your paper return. Attach a copy of each of your Forms W-2 to your paper return. Also, attach to your paper return any Form 1099-R you received that has withholding tax in box 4.

Mail your return to the Internal Revenue Service Center for the area where you live. A list of service center addresses is in the instructions for your tax return.

Form 1040 or 1040-SR Line Entries

If you want the IRS to figure your tax. Read Form 1040 or 1040-SR, lines 1 through 15, and Schedule 1 (Form 1040), if applicable. Fill in the lines that apply to you and attach Schedule 1 (Form 1040), if applicable. Don’t complete Form 1040 or 1040-SR, line 16 or 17. If you are filing a joint return, use the space on the dotted line next to the words “Adjusted Gross Income” on the first page of your return to separately show your taxable income and your spouse’s taxable income.

Read Form 1040 or 1040-SR, lines 19 through 33, and Schedules 2 and 3 (Form 1040), if applicable. Fill in the lines that apply to you and attach Schedules 2 and 3 (Form 1040), if applicable. Don’t fill in Form 1040 or 1040-SR, line 22, 24, 33, or 34 through 38. Don’t fill in Schedule 2 (Form 1040), line 2 or 3. Also, don’t complete Schedule 3 (Form 1040), line 6d, if you are completing Schedule R (Form 1040), or Form 1040 or 1040-SR, line 27a, if you want the IRS to figure the credits shown on those lines.

Payments. If you have federal income tax withheld that is shown on Form W-2, box 2; Form 1099, box 4; Form W-2G, box 4; or another form (see the Instructions for Form 1040 for more information), enter the amount on Form 1040 or 1040-SR, line 25. Enter any estimated tax payments you made on Form 1040 or 1040-SR, line 26.

Credit for child and dependent care expen- ses. If you can take this credit, complete Form 2441 and attach it to your paper return. Enter the amount of the credit on Schedule 3 (Form 1040), line 2. The IRS will not figure this credit.

Net premium tax credit. If you take this credit, complete Form 8962, Premium Tax Credit (PTC), and attach it to your return. Enter the amount of the credit on Schedule 3 (Form 1040), line 9. The IRS will not figure this credit.

Credit for the elderly or the disabled. If you can take this credit, the IRS can figure it for you. Enter “CFE” on the line next to Schedule 3 (Form 1040), line 6d, and attach Schedule R (Form 1040) to your paper return. On Schedule R (Form 1040), check the box in Part I for your filing status and age. Complete Parts II and III, lines 11 and 13, if they apply.

Earned income credit. If you can take this credit, the IRS can figure it for you. Enter “EIC” on the dotted line on Form 1040 or 1040-SR, line 27a. If you elect to use your nontaxable combat pay in figuring your EIC, enter the amount on Form 1040 or 1040-SR, line 1i.

If you have a qualifying child, you must fill in Schedule EIC (Form 1040), Earned Income Credit, and attach it to your paper return. If you don’t provide the child’s social security number

on Schedule EIC, line 2, the credit will be reduced or disallowed unless the child was born and died in 2025.

If your credit for any year after 1996 was reduced or disallowed by the IRS, you may also have to file Form 8862 with your return. For details, see the Instructions for Form 1040.