Differences in 1040A & 1040 EZ
The Internal Revenue Service provides individual taxpayers access to three tax return form choices. These forms are the 1040, 1040EZ and 1040A. The 1040 and 1040EZ are the most commonly used forms, according to the IRS. Like most IRS forms, the 1040 and 1040EZ forms require that individuals meets certain requirements in order to use the forms.
Other People Are Reading
-
Simplicity
-
The IRS Form 1040EZ is the simplest form to use. In order to qualify for the form's use, you must file single or married filing jointly and claim no dependents. This allows for all funds to be totaled without exception. The IRS Form 1040 is more detailed. The form allows for all filing statuses, including married filing separately and widow. The IRS estimates that the required time to complete an IRS Form 1040 is approximately 45 minutes.
Income
-
In order to use IRS 1040EZ form, you must have taxable income that does not exceed $100,000 and you must not owe any household employment taxes. If your income exceeds $100,000 or you are responsible for household employment taxes, business taxes or you will itemize your deductions, you must use IRS Form 1040. You are required to file IRS Form 1040 if your income generates from annuities, pensions, IRAs, taxable Social Security and railroad retirement benefits.
-
Businesses and Bankruptcy
-
If you are a business owner, partner or shareholder, or you have unreported tips, nontaxable distributions or dividends, you must use Form 1040. Additionally, if you are a debtor on a Chapter 11 bankruptcy case filed after October 16, 2005, you must use IRS Form 1040.
Taxes & Credits
-
People who do not owe any alternative minimum tax can file IRS Form 1040EZ. You cannot file this form if you claim student loan interest deductions, educator expense deductions, tuition and fee deductions, educational credit, retirement savings contribution credits or health coverage tax credit. These deductions and considerations must only be listed on IRS Form 1040.
1040 versus 1040EZ
-
It is important that you select the appropriate form when filing your tax return. You must consider the ease of the filing process as well as the qualifications for using each form. IRS Form 1040EZ filers must consider the possible loss of tax credits and deductions when filing the form. Since IRS Form 1040EZ prohibits deductions, you may find that you are losing valuable credits that can result in a substantial tax refund or reduced tax liability.
If you research your options and find that you qualify to file either form, complete a rough draft of the IRS Form 1040 to see if your tax liability can be reduced by any possible deductions. There are many deductions that you can qualify for, even without dependents or assets. If you address the deduction and tax credits and find that it is not in your benefit, complete the final draft of the IRS Form 1040EZ.
-
