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What are key differences between Form 1040, 1040A and 1040EZ?

By Janet Berry-Johnson 

When the time comes to file your individual income tax return, you generally have a choice between three forms: Form 1040, 1040A or 1040EZ.

Just about anyone can use Form 1040, but Form 1040A and Form 1040EZ may be better-suited to taxpayers with simple returns. According to the IRS, an estimated 84.6 million taxpayers filed Form 1040 in 2014, while around 40.9 million filed Form 1040A and 23.3 million filed Form 1040EZ.

How do you know which is right for you? Here's an overview of the three forms and what sets them apart.

 

Form 1040EZ

The 1040EZ is the simplest form to complete but has very narrow requirements.

Kelly Phillips Erb, senior editor at Forbes Media LLC and author of the popular Taxgirl blog, says, "The 1040EZ is your really, really standard form for people who are single or married with no dependents and don't plan on itemizing. I see students or young people who are early in their careers and just filing to fulfill an obligation or request a refund using this form."

Filing status

To use Form 1040EZ, your filing status must be “Single” or “Married filing jointly.” Taxpayers who file as “Head of household” or “Qualifying widow(er)” cannot use it, as those filing statuses involve dependents, and you cannot claim a dependent on Form 1040EZ.

You (and your spouse if filing a joint return) must be under the age of 65 on January 1 of the following year (for the 2016 tax year, you would have to be under the age of 65 on January 1, 2017) and not blind at the end of the tax year (for the 2016 tax year, you could not be blind on December 31, 2016). Taxpayers who are 65 and older or blind are allowed an additional standard deduction that isn't available on Form 1040EZ.

Erb says this caveat often confuses seniors. "They may think their return is very simple, but you can't use the 1040EZ if you're claiming the additional standard deduction," Erb says.

Income

To use the 1040EZ, your taxable income must be less than $100,000, no matter your filing status. You're also limited to certain types of income, such as wages and salaries, tips, taxable scholarship and fellowship grants, unemployment compensation, and Alaska Permanent Fund dividends.

Any interest income, such as interest earned from a savings or investment account, must be less than $1,500. Common sources of income that aren't eligible for the 1040EZ include alimony, business income or losses, capital gains and losses, retirement account distributions, rent and royalties, Social Security benefits, and income from partnerships, S corporations, estates and trusts.

Form 1040EZ filers can't claim any adjustments to income. These are known as "above-the-line" deductions and are used to reduce adjusted gross income (AGI).

Common adjustments not allowed on the 1040EZ include IRA contributions, alimony payments, student loan interest, health savings account (HSA) contributions, moving expenses and the educator expense deduction for K-12 teachers.

Other limitations

The only tax credit allowed on the 1040EZ is the Earned Income Tax Credit (EITC). You cannot use the 1040EZ if you owe household employment taxes for an employee such as a housekeeper or a nanny. You also can't itemize deductions if you file a 1040EZ.

 

Form 1040A

The 1040A is the next simplest form to file. Its requirements are a little broader than the 1040EZ.

Filing status

All filing status options are available to 1040A filers, including “Single,” “Married filing jointly,” “Married filing separately,” “Head of household” and “Qualifying widow(er).”

Income

Like Form 1040EZ, Erb says 1040A filers are limited to taxable income of less than $100,000.

However, the 1040A allows a few more categories of income. Taxpayers with income from sources such as capital gain distributions, IRA or pension distributions, and Social Security can use 1040A.

The 1040A also allows a limited number of above-the-line deductions. Adjustments to income are allowed for expenses such as IRA contributions, student loan interest, educator expenses, and tuition and fees.

Other limitations

In addition to the EITC, the 1040A can accommodate the Child and Dependent Care Tax Credit, the Credit for the Elderly or Disabled, education credits such as the Lifetime Learning Credit and the American Opportunity Tax Credit, the Retirement Savings Contributions Credit, the Child Tax Credit and Additional Child Tax Credit, and the Premium Tax Credit.

Like the 1040EZ, the 1040A doesn't allow itemized deductions.

 

Form 1040

Form 1040 is the broadest available option. Anyone filing an individual return can use it, other than U.S. nonresident aliens, who file using a 1040NR. Like the 1040A, it's available for any filing status.

Income

Taxpayers with taxable income over $100,000 or income from businesses or farms must file using Form 1040. Taxpayers with pass-through income from a partnership, S corporation, estate or trust also must use Form 1040.

All above-the-line deductions are allowed on Form 1040, including adjustments for HSA contributions, moving expenses, self-employment taxes, self-employed health insurance premiums and alimony payments.

 

Bottom line

Taxpayers can choose to itemize or take the standard deduction, and all tax credits are available on Form 1040.

A good rule of thumb is to use the simplest form available in your situation, though the Form 1040 can accommodate any type of filer other than nonresident aliens. But remember, if you filed a 1040EZ or 1040A last year, your situation may have changed this year and you may need or want to use a different form.

 

About the Author: Janet Berry-Johnson is a CPA and a freelance writer with a background in accounting and insurance. Her writing has appeared in Forbes, Freshbooks, The Penny Hoarder, Discover Student Loans, Chase News & Stories, Capitalist Review, Guyvorce and Intuit's Firm of the Future blog. Janet lives in Arizona with her husband and son and their rescue dog, Dexter.

Disclaimer: We know taxes are complicated, so we provide this information for general educational purposes only. It isn’t intended to be personalized legal, financial or tax advice, and we don’t guarantee the accuracy, completeness or reliability of this content. If you have questions about your personal tax situation, consider contacting an accountant, tax attorney or financial advisor. Come back to Credit Karma Tax when you’re ready to file your taxes for free!

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