Washington DC Form D-40 Line by Line Guide
Did you know 9 states do not require residents to pay a personal income tax? Folks that live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, are exempt from this bill. Furthermore, 7 other states simply enforce a flat tax rate. So what’s the moral to the story? People who live in these states are able to buy more stuff because they pay less tax.
But for the rest of us, residential income tax is a necessary evil, one that takes a serious bite out of our disposable income. And while the forms are designed to collect the same data, they’re all constructed differently. What follows is a breakdown of Form D-40, the District of Columbia’s Individual Income Tax Return. Granted, DC residents don’t technically live in a state, but they are not exempt from a personal income tax.
As locals know, the District of Columbia is not part of any state and is directly run by the government. Therefore, residents generally have less self-governance than those in other states. Heck, DC taxpayers couldn’t even vote for President until 1961! My point is if residents had some say in the construction of their state tax form, I can pretty much guarantee they would have voted to eliminate some of the additional schedules that go along with it.
While the main form is only 2 pages and 40 lines, the D-40 may require the help of from as many as 5 different schedules (some of which are up to 4 pages long). Ultimately, the form is easy enough to use provided you can ignore all the bleepin schedules. But if you’ve got a complex tax situation going on, the D-40 and its friends could make for a rough day. Therefore, we’re giving this Form a mediocre 6 of 10 on user-friendly meter as we feel the additional schedules could be condensed and simplified.
Begin by filling in your name, address, phone and Social Security numbers at the top. Then you can take care of your filing status and residency before moving onto the meat of the form. Simple enough?
Enter your wage, business income (or loss), capital gains (or losses), and rental income on Lines A through D. Next, record your federal adjusted gross income on Line 3, and any District specific additions on Lines 4 and 5. Obviously, you’ll have to add Lines 3, 4, and 5 on Line 6.
Lines 7 through 13 are slated for State specific subtractions to your income; just work through any applicable lines. When set, add Lines 7 through 13 on Line 14. Then you can subtract Line 14 from Line 6 on Line 15, which will yield your DC adjusted gross income.
Fill in the appropriate oval on Line 16. If you itemize, you’ll need to look up page 15 of the booklet before you can work through Line 17. Enter the number of your exemptions on Line 18; if you’re claiming more than 1 (2 if filing jointly), you’ll need to attach a Schedule S. Now multiply the number of your exemptions by $1,675 on Line 19. Add Lines 17 and 19 on Line 20 and subtract Line 20 from Line 15 to get your DC taxable income, which goes on Line 21.
If Line 21 is $100,000 or less, you’re allowed to look up your income on the tax table. If it’s more, then you have to work through Calculation I on page 21 of the booklet. Line 23 provides for a childcare or dependent-care credit, while the next four lines allows for various other credits. When you’ve got all that straightened out, add Lines 23 through 25 on Line 26 and subtract Line 26 from Line 22 on Line 27.
Lines 28, 29, and 30 provide for more credits, so if you own property, or are entitled a DC earned income credit, pay close attention. On Line 31 enter your DC withholdings, you can find the amount on your W-2. Enter any estimated tax payments on Line 32 and any additional tax paid with an amended return on Line 33. Now add Lines 28 and 29 through 33 to get your total payments and refundable credits.
You’ll only work through the refund section is Line 34 is more than Line 27. Subtract Line 27 from Line 34 on Line 35; this is equal to the amount you overpaid. If you want some of this overpayment to go towards next year, put the amount on Line 36. If you had to fill out Schedule U, include your contribution amount on Line 37. If you’ve been slapped with any penalties, include the amount on Line 38. Now add Lines 36 through 38 on Line 39 before subtracting Line 39 from Line 35 to get the exact amount of your refund.
But if Line 34 is less than Line 27, you owe and will have to skip the refund section. Enter the difference from Lines 34 and 27 on Line 41. Again, if you filled out a Schedule U, enter your contribution amount on Line 42. If penalties or interest apply, include those amounts on Lines 43a and 43b. Now add Lines 41 through 43 on Line 44 to get the total amount you owe.
All that’s left is to fill in your direct deposit information, sign, and date the bottom of the form. If you had a tax pro help you, they will do the same.
The challenge of the DC tax return does not lie in the main form; it lies in the 5,000 schedules that go along with it. So take some good advice, stay organized! If you know your stuff, you’ll know which Schedules you can skip. Then you’ll be able to knock off the D-40 in enough time to watch John Boehner (Speaker of the House) get emotional. But if you have to work through all these Schedules, then you’ll be the one crying.