How do You Determine Which Form to Use?
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by Israel Torres, Oct 18, 2007 |
How do you determine which income tax form to use when filing your taxes this coming year? As you may be well aware that a tax professional will charge you for each form that he/she fills out. If you do not need to file the longer forms it is cost effective to go with the shorter forms. Here are a few rules that can give you an idea of which form to file. |
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Right off the bat if you made over $100,000 of earned income this past tax year you must file a 1040. You may also want to file form 1040 if you owned a house and want to deduct mortgage interest and real estate taxes. If add up your mortgage interest and real estate taxes and they add up to more than the standard deduction for your filing status than you should consider filing a 1040 long form but it is not a requirement. |
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Finally, you must use Form 1040 under certain circumstances, such as:
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- Your taxable income is $100,000 or more (must use 1040),
- 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" Corp., or 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.
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Here are a few rules to determine whether you can file the simplest of all income tax forms the Form 1040EZ.
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- Your filing status is single or married filing jointly,
- You claim no dependents,
- You, and your spouse if filing a joint return, were under 65 on January 1, and not blind at the end of the year,
- You have only wages, salaries, tips, taxable scholarship and fellowship grants, unemployment compensation, qualified state tuition program earnings, or Alaska Permanent Fund dividends, and your taxable interest was not over $1,500,
- Your taxable income is less than $100,000,
- You did not receive any advance earned income credit payments,
- You do not owe any household employment taxes on wages you paid to a household employee,
- You do not claim a student loan interest deduction, an educator expense deduction, or a tuition and fees deduction, and
- You do not claim an education credit, retirement savings contributions credit, or a health coverage tax credit.
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Also remember that if you file Form 1040EZ, you cannot itemize deductions or claim any adjustments to income or tax credits (other than the earned income credit.)
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If you do not meet all the requirements listed above to be able to file a 1040EZ then you may need to file a 1040A form.
If you file Form 1040A, the only credits you can claim are the credit for child and dependent care expenses, the earned income credit, the adoption credit, the credit for the elderly or the disabled, education credits, the child tax credit, the additional child tax credit, and retirement savings contribution credit.
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Here are a few rules to determine whether you can file the Form 1040A.
- Your income is only from wages, salaries, tips, taxable scholarships and fellowships, interest, ordinary dividends, capital gain distributions, pensions, annuities, IRAs, unemployment compensation, and taxable social security or railroad retirement benefits and Alaska Permanent Fund dividends,
- Your taxable income is less than $100,000,
- You do not itemize deductions, and
- Your only adjustments to income are the IRA deduction, the student loan interest deduction, educator expenses and the tuition and fees deduction
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