There are three kinds of IRS Form 1040, and they all have specific requirements. Here’s a quick breakdown:
- IRS Form 1040EZ: You can’t claim any credits or deductions, with the exception of the Earned Income Tax Credit. It’s the briefest version of the 1040, and you can easily file your return for free with many online tax preparation services.
- IRS Form 1040A: If you don’t plan to itemize your deductions, like for mortgage interest, then take a look at the 1040A. You might not be able to claim deductions, but you can claim certain tax credits.
- IRS Form 1040: You can claim all the deductions and credits in the world, and anyone can use it, regardless of filing status. It’s just much longer than the other forms.
There are three kinds of IRS Form 1040, and they all have specific requirements.
When to use IRS Form 1040EZ
The IRS website says you should use the 1040EZ if:
- You are filing as single or married filing jointly. (Here’s some help figuring out what tax filing status to choose.)
- You have only wages, tips, salaries, unemployment compensation, Alaska Permanent Fund dividends, or taxable scholarships and fellowship grants, and your interest income was not over $1,500 last year.
- You (and your spouse if filing a joint return) were under age 65 on Jan. 1 of the following tax year and not blind at the end of the tax year.
- You do not claim any dependents.
- Your taxable income was less than $100,000.
- Advance payments of the Premium Tax Credit were not made for you, your spouse, or any individual you enrolled in coverage for whom no one else is claiming the personal exemption.
- All earned tips are included on your W-2 in boxes 5 and 7. (Here’s what you need to know about your W-2.)
- You do not owe household employment taxes on wages paid to a household employee.
- You are not a debtor in a Chapter 11 bankruptcy case filed after Oct. 16, 2005.
- You will not claim any adjustments to income (deduction for IRA contributions, a student loan interest deduction, etc.).
- You will not claim any credits other than the Earned Income Tax Credit.
One of the biggest reasons NOT to use the 1040EZ is that the only tax break you’re eligible for is the earned income credit, which is for low-income taxpayers. If you think you may be eligible for any other tax breaks, use a different form. You don’t want to miss out on your well-deserved deductions and credits.
When to use IRS Form 1040A
IRS Form 1040A offers more tax breaks than IRS Form 1040-EZ does, including child care, education and retirement savings. Still, deductions and credits are somewhat limited .Here are the IRS form 1040A requirements:
- Your taxable income is less than $100,000.
- You do not itemize deductions.
- You claim credits only for child and dependent care expenses, the earned income credit, the credit for the elderly or the disabled, education credits, the child tax credit, the additional child tax credit and the retirement savings contribution credit.
- Your only adjustments to income are the IRA deduction, the student loan interest deduction, the educator expenses deduction, and the tuition and fees deduction.
- Your income comes entirely from: wages, salaries, tips, taxable scholarships and fellowship grants, interest, ordinary dividends, capital gain distributions, pensions, annuities, IRAs, unemployment compensation, taxable Social Security or railroad retirement benefits, Alaska Permanent Fund dividends.
- You did not have an alternative minimum tax adjustment on stock you acquired from the exercise of an incentive stock option.
When to use IRS Form 1040 (“the long form”)
IRS Form 1040 is the most customizable form. And because you can itemize deductions, you do not suffer the same limitations as with the 1040EZ or the 1040A; you might qualify for much more. The IRS requires you to file a form 1040 if:
- Your taxable income was $100,000 or more.
- You have certain types of income, such as unreported tips; certain nontaxable distributions; self-employment earnings; or income received as a partner, a shareholder in an S corporation, or are a beneficiary of an estate or trust.
- You itemize deductions or claim certain tax credits or adjustments to income, or
- You owe household employment taxes.