Posted By Wade Michels

1040 from A to EZ

Between the 1040, 1040A and 1040EZ it's difficult to know which one is for you.
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Through much blood, sweat, and tears, you’ve managed to earn a decent wage. So its time to party- right? Well, if you’re single and that wage is more than $9,350 ($18,700 if married), the government wants some of your hard earned cash. Bummer.

Between the 1040, 1040A, 1040EZ, 2099HARD, (ok I made that last one up), it’s darn near impossible to know which is right for you. So in an attempt to simplify the process, we’re detailing who can use what.

1040EZ

As the name implies, the EZ is a snap to fill out. It’s for singles and joint filers with income up to $100,000, so if you’re fortunate enough to be bringing home six figures, plan on using a different form. If you have dependents, such as kids, elderly, or a really big dog (kidding), the EZ is not for you. If you’re 65, the IRS would like to know a little more about the bacon your bringing home during your golden years.

But by taking the EZ way out, you won’t be able to itemize deductions. So while this form is easy to file, it ensures you don’t get everything coming to you. Most of us would happily fill out a different version if we knew it would maximize a return or minimize a tax liability.

EZ’s Big Brother

You will use the 1040A if you have to report different types of income, such as dividends, interest, child support, and the like. You will also be able to enter any student loan interest or any distributions from pensions or IRA’s on this form.

Like the EZ, you will not be able to use the 1040A if you have earned rental income, make more than $100K, or are self employed.

Again an important difference between this form and the next size up is 1040A won’t allow you to itemize deductions. So if those deductions total more than $5,700 ($10,400 filing jointly) it would behoove you to file the granddaddy of them all, the dreaded yet misunderstood 1040.

One Form to Rule Them

The 1040 is thorough, it’s detailed, and it’s designed to get you what you deserve. Have you paid points or mortgage interest on a new or used home? Then the 1040’s for you. Did you move and incur expenses looking for a new job? If so get the calculator out and add up those dollars. Did you share some of your good fortune with a charity? This is where you let the IRS know about your good deed.

The 1040 is the last stop on the road to tax form literacy. And most would agree it’s a pretty good idea to file one whether your circumstances require you too or not. Why? Because by doing some extra work there’s a good chance you will find deductions you never knew you had. Cha Ching!

In addition, there are a whole slew of forms required by the IRS. Check this out:

What What they do / Instructions
Schedules A&B Itemized Deductions & Interest and Ordinary Dividends
Schedules C Profit or Loss From Business
Schedule D Capital Gains and Losses
Schedule EIC Earned Income Credit
Form 8888 Direct Deposit of Refund to More than One Account
Form 2441 Child and Dependent Care Expenses

So when you’re finally ready to send in or e-file your tax return, the schedules that apply need to accompany it. Fortunately, these supplemental forms are pretty straight forward. If you’re organized, the process should be quick and painless.

Fin

The 1040EZ and the 1040A are for those whose financial situations aren’t messy and don’t have a lot of moving parts. But taxpayers need to know that they can submit any one of the three forms mentioned; and pound for pound the 1040 will allow you to keep more cash. So get crackin’ on those deductions, your wallet will thank you for it.

Comments:
gary - 11 months, 3 weeks ago
I cannot find 1040 E
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