Which Tax Form is right for you?
There are three different 1040s that can be used when filing your tax return. The following can assist taxpayers with determining which form is right for them:
Form 1040EZ can typically be used if all of the following apply:
Your taxable income is below $100,000 and you only had wages, taxable scholarship, unemployment income and taxable interest
Your filing status is single or married filing jointly
You do not claim any dependents
You do not claim any adjustments to income
Your interest income is $1,500 or less
Form 1040A can typically be used if all of the following apply:
Your taxable income is below $100,000
You have capital gain distributions, IRA distributions, etc.
You claim certain tax credits, such as the child tax credit, education credits, etc.
You claim dependents
You claim adjustments to income for IRA contributions, student loan interest, tuition & fees and educator expenses.
However, you must use form 1040 if any of the following apply:
Your taxable income is $100,000 or more
You claim dependents
You claim itemized deductions
You report self-employment income, income from the sale of property and all other forms of income
You claim adjustments to income, other than and including those required for 1040A
You claim tax credits, other than and including those required for 1040A
Note: The EITC can be claimed on all forms
Business owners can also find it helpful to know if the Schedule C-EZ is more appropriate for reporting business income.
Schedule C-EZ can typically be used if all of the following apply:
You did not have a net loss from your business
Your expenses are not greater than $5,000
You use the cash method of accounting
You have no employees
You have no inventory
You are not depreciating business property
You are not deducting home office expenses
You are not carrying over passive activity losses from an earlier tax year
However, a Schedule C must be used in all other instances for reporting business income and expenses, including the Schedule C-EZ requirements. Also, a Schedule C can be used to report certain cash income, income reported on a 1099-MISC, wages and expenses as a statutory employee and income and deductions of qualified joint ventures.