Tax Basics:

Which Form to File?

1040EZ

The 1040EZ is the simplest and shortest of the three types of forms your client may use. The 1040EZ does not have as many lines to fill out nor does it have as many schedules to fill out and attach as the other forms. They don't even have to compute the math if they do not want to. The IRS will do it for them! All they have to do is fill out the lines that apply to them in lines 1 through 8 and send it in. Your client may however choose to compute it him or herself, as it is not that difficult on this form. After all, even the IRS makes mistakes.

They can file a 1040EZ if they meet all of the following criteria:

  • They are single or married filing jointly and do not have any dependents
  • Their only income is from wages, tips, salaries, taxable scholarships, unemployment compensation and fellowship grants – and they do not have more than $400 in taxable interest income
  • They and their spouse if filing jointly are under the age of 65 and are not blind
  • Their taxable income is less than $50,000
  • They aren't receiving any advanced earned income credits. They can verify this by checking box 9 of their W-2.
  • They are not itemizing deductions or claiming any adjustments to income (IRA or student loan interest deductions) or tax credits (such as childcare expenses.)

1040A

The 1040A is not as simple as the 1040EZ although it is nowhere near as time-consuming and complex as the 1040 can be. They may use the 1040A if they meet all of the following criteria:

  • Your client is not itemizing deductions
  • Their taxable income is less than $50,000
  • Their income is only from salaries, wages, tips, taxable scholarships, fellowship grants, pensions or annuities, withdrawals from their IRA, unemployment compensation, interest and dividends

They may use 1040A to claim all of the following:

  • Earned income credit
  • Deduction for contributions to an IRA
  • Nondeductible contributions to an IRA
  • Credit for child and dependent care expenses
  • Child tax credits
  • Educations credits
  • Adoption credit
  • Student loan interest deduction

If they do not fit the criteria to file either a 1040EZ or a 1040A, they are unfortunately stuck using the 1040, otherwise known as the long form. Anyone who chooses to itemize his deductions as opposed to taking the standard deduction must use the 1040. Likewise, anyone who owns rental property is self-employed or sells stocks or bonds are also stuck with the 1040. In using this form, they are required to fill out more lines, fill out and attach more schedules and spend more time computing their taxes than with either of the two simpler forms.