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What is the Tax Form 1040?

Welcome to the inaugural post in our Tax Form series [3], a new, somewhat dry, tax series in which we take a look at all the various tax forms the IRS uses. I know it sometimes isn’t the most exciting of topics but understanding the various tax forms is absolutely crucial if you want to do your taxes. Many of you will probably be filing electronically, so software will help you decide which forms to use and how to fill it out, but there are still a few hold-outs out there who insist on filing by paper.

If you are one of them, then this new series is designed for you! (cue applause!)

The Tax Form 1040 is the cornerstone of your tax return. There are two alternatives in the Form 1040A and the Form 1040EZ, which are available to a subset of taxpayers, but the Form 1040 is the long form that many people think of when you talk about your federal personal income tax return. Form 1040A is basically Form 1040-Lite and Form 1040EZ is Form 1040-SuperLite.

Form 1040

The Form 1040 [4] is the main document you fill out for your taxes and it comes with 12 optional “Schedules.” Each Schedule goes into greater detail into an aspect of income taxes, such as Schedule A: Itemized Deductions [5]. You won’t necessarily need every single one of those Schedules but here’s a recap of each one (some of these will change from year to year, for example Schedule M will expire along with the Making Work Pay Credit [6]):

How do you know whether you need a Form 1040 or a Form 1040A or Form 1040EZ? It comes down to the complexity of your tax situation, in descending complexity. For example, if you plan on claiming the standard deduction [7], chances are one of the simpler forms is enough.

Form 1040A

The simpler form 1040A has only four schedules:

As you can see, it has no Schedule A equivalent, for itemized deductions, because 1040A doesn’t let you claim itemized deductions. If you need to claim anything on a Schedule that isn’t in the above list, chances are you’ll need to use a Form 1040. Another rule is that your taxable income has to be below $100,000 to use the Form 1040A.

Form 1040EZ

The simplest of the three tax forms it the Form 1040EZ [8], which is a single page (with another worksheet page). You can use it if your taxable income is below $100,000, you’re filing single or married filing jointly, you (and spouse if applicable) are under 65 and not blind, you are not claiming any dependents, and your interest income is $1,500 or less.

As you can see, the rules aren’t so simple to understand, which explains the rising popularity of tax preparation software. Fortunately there are free tax filing options [9] out there if you qualify for them.