Trio of 1040s got you dizzy? If you’re not sure which kind of tax form you might be filing, we can help you determine where you might fit on the 1040 spectrum, from the short & sweet to the complex. (The information in this post was updated on April 10, 2014)
Generally, you’re a 1040EZ if all of the following are true:
- Your filing status is single or married filing jointly.
- You don’t claim dependents.
- Your taxable income is less than $100,000 .
- Your taxable interest is $1,500 or less.
- You don’t claim adjustments to income, like student loan interest deduction or an IRA deduction.
- The only credit you claim is the Earned Income Tax Credit.
- You, and your spouse, if filing a joint return, were under age 65 and not blind at the end of 2013. If you were born before Jan. 1, 1949, you’re considered to be age 65 and can’t use Form 1040EZ.
- You don’t owe household employment taxes on wages you paid to a household employee.
- You aren’t a debtor in a Chapter 11 bankruptcy case filed after Oct. 16, 2005.
- You don’t owe Alternative Minimum Tax (AMT) or aren’t required to file Form 6251: AMT.
- Your income sources were only wages, salaries, tips, taxable scholarships, taxable fellowship grants, unemployment compensation or Alaska Permanent Fund dividends.
With the 1040EZ, you can’t itemize tax deductions, and you can’t have income from self-employment, alimony, dividends or capital gains.
Also, you can’t claim credits or deductions, with the exception of the Earned Income Credit (EIC). So you can’t claim charitable donations, mortgage interest paid, credits for child and dependent-care expenses or education credits. Note: the amount of the EIC that you may be able to claim may be larger if you use a 1040A or 1040 in some circumstances.
Your taxable income must be less than $100,000 to use the 1040A. Your income can come only from these sources:
- Wages, salaries, and tips
- Interest and dividends
- Capital gain distributions
- Taxable scholarship and fellowship grants
- Pensions, annuities, and IRAs
- Unemployment compensation
- Taxable Social Security and railroad retirement benefits
- Alaska Permanent Fund dividends
The only adjustments to income you can claim are the IRA deduction and the student-loan interest deduction — and you can also claim educator expenses and the tuition and fees deduction.
The only credits you can claim on the 1040A are:
- Child tax credit
- Additional child tax credit
- Education credits
- Earned Income Credit (EIC)
- Credit for child and dependent-care expenses
- Credit for the elderly or the disabled
- Retirement savings contributions credit
You can also use a 1040A if you receive dependent-care benefits or owe tax from the recapture of an education credit or the Alternative Minimum Tax (AMT).
A couple things to keep in mind about the 1040A: You can’t itemize deductions, which means you can’t deduct charitable donations or mortgage interest paid. Also, you can’t claim an AMT adjustment on stock acquired from exercising an incentive stock option.
Form 1040 is the most complex of the 3 major individual tax forms — and it offers tax breaks that aren’t available on the simpler Form 1040EZ or Form 1040A. You can report all types of income, expenses, and credits on a 1040.
If you receive these types of income, you must file a 1040:
- Self-employment income
- Tips you didn’t report to your employer
- Income you receive as a partner in a partnership, a shareholder in an S corporation or beneficiary of an estate or trust
- Insurance policy dividends totaling more than the premiums you paid
- Distributions from a foreign trust
You also must file a 1040 if any of these apply:
- You qualify for the foreign earned income exclusion.
- You qualify to exclude income from sources in Puerto Rico or American Samoa because you were a bona fide resident of either.
- You have an Alternative Minimum Tax (AMT) adjustment on stock acquired from exercising an incentive stock option.
- You owe excise tax on insider stock compensation from an expatriated corporation.
- You’re reporting an original issue discount (OID) amount that doesn’t match the amount on Form 1099-OID.
- You owe household employment taxes.
- You’re eligible for the health coverage tax credit.
- You’re claiming the adoption credit or you received employer-provided adoption benefits.
- You’re a debtor in a Chapter 11 bankruptcy case filed after Oct. 16, 2005.
- Your employer didn’t withhold Social Security and Medicare taxes from your pay.
- You had a qualified health savings account (HSA) funding distribution from your IRA.
- You’re repaying the first-time homebuyer credit.
- You owe additional Medicare Tax or had Additional Medicare Tax withheld and must file Form 8959.
- You owe Net Investment Income Tax and must file Form 8960.
- You have adjusted gross income of more than $150,000 and must reduce the dollar amount of your exemptions.
Filing a form that’s too simple for your tax situation may cause you to forfeit credits and deductions you’re entitled to, so be sure to consult a tax pro to make sure you’re choosing the form that’s appropriate for you.