Just be warned, the tax forms themselves won’t tell you everything about a filer’s finances.
Think of the Form 1040 as an important piece of the puzzle in a taxpayer’s financial condition. Combined with other documents, including a statement of net worth, it can provide a more complete picture of that person’s bottom line.
“What you can see from the individual Form 1040 are the types and sources of income, including whether the taxpayer has capital gains or dividend income,” said Joshua D. Blank, professor of law at the University of California, Irvine.
“What you can’t see is wealth,” he said. “We tax people based on annual income and not total wealth.”
The first two pages of a Form 1040 are a summary of the taxable sources of income a filer is required to report.
The attached schedules are what can shed light on the sources of income and the deductions a taxpayer takes.
Deductions reduce taxable income based on your federal income tax bracket.
Schedule A is the document taxpayers must fill out to calculate their itemized deductions, including any deductible medical expenses and state and local taxes paid.
Take note: Starting in the 2018 tax year, the deduction for state and local taxes paid was capped at $10,000 for individual filers, so there’s a limit to the extent Trump — or anyone with a personal residence in a high-tax state like New York — could write off those property and income taxes.
Keep a close eye on the “gifts to charity” portion of Schedule A. Donations that are more than $500 must be spelled out on Form 8283, the noncash charitable contribution form.
Taxpayers must describe the donated property and provide a summary of its appraised fair market value, including art, real estate, cars and more.