When you are ready to file your tax return, you’ll have to pick from among three forms: the 1040, the 1040EZ or the 1040A.
Anyone can decide to fill out Form 1040; the others have more-specific requirements. Here’s a quick breakdown:
- Form 1040EZ: With this one, you can’t claim any credits or deductions, with the exception of the Earned Income Tax Credit. It’s by far the briefest version of the 1040, and you can easily file your return for free with many online tax preparation services.
- 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 tax credits, like for educational expenses.
- 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.
The longer the form, the more opportunities for tax breaks, both deductions and credits. Both are good, ultimately reducing how much the federal government takes from you. To see which deductions and credits are available with each 1040 tax form, check the table below.
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When to use the 1040EZ tax form
Don’t choose the 1040EZ just because it’s the simplest option. Sometimes, the EZ is all you need — but sometimes a little extra paperwork can mean substantial savings. The IRS website says you should use the 1040EZ if:
- You are filing as single or married filing jointly.
- 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.
- 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.
But, if you have absolutely nothing to claim, the 1040EZ is a quick, one-page shortcut designed to reduce the hassle of filing taxes.
When to use the 1040A tax form
The 1040A tax form allows filers to claim a number of deductions not available on the 1040EZ. Here are the 1040A requirements from the IRS website:
- 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.
As you can see, the 1040A offers quite a few more tax breaks than the EZ, including child care, education and retirement savings. Still, deductions and credits are somewhat limited. If you have more to claim than the adjustments and credits listed, you’ll want to tackle the 1040.
When to use the 1040 tax form
The IRS requires you to use the 1040 tax form 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.
In terms of tax breaks, the 1040 is the most customizable form. 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.
Not sure if you qualify for additional breaks? It’s worth looking into. You’d be surprised by some of the tax deductions people successfully claim (guard dogs, swimming pools, smoking cessation programs, etc.). The IRS website is an excellent place to start.
Tax Breaks Available on 1040 Forms
|Form 1040EZ||Form 1040A||Form 1040|
|Earned Income Tax Credit (EITC)||Earned Income Tax Credit (EITC)||Earned Income Tax Credit (EITC)|
|IRA deduction||IRA deduction
|Student loan interest deduction||Student loan interest deduction
|Educator expenses deduction||Educator expenses deduction
|Tuition and fees deduction||Tuition and fees deduction|
|Child and dependent care credits||Child and dependent care credits|
|Elderly and disabled credits||Elderly and disabled credits|
|Education credits||Education credits|
|Child tax credits||Child tax credits|
|Additional child tax credit||Additional child tax credit|
|Retirement savings contribution credit||Retirement savings contribution credit|
|Home mortgage points|
|Work-related educational expenses|
|Casualty, disaster and theft losses|
This post has been updated.