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Which Income Tax Form Should I Use?
Larry Denton
As an American taxpayer you must use one of three forms to file your return: Form 1040EZ, Form 1040A, or Form 1040.
Form 1040EZ is the simplest form to use. However, you can only use Form 1040EZ if all of the following apply: your filing status is single or married filing jointly (if you were a nonresident alien at any time in 2005, your filing status must be married filing jointly); you (and your spouse if married filing a joint return) were under age 65 and not blind at the end of 2005. If you were born on January 1, 1941, you are considered to be age 65 at the end of 2005; you do not claim any dependents; your taxable income is less than $100,000; your income is only from wages, salaries, tips, unemployment compensation, Alaska Permanent Fund dividends, taxable scholarship and fellowship grants, and taxable interest of $1,500 or less; you did not receive any advance earned income credit (EIC) payments; you do not claim any adjustments to income, such as a deduction for IRA contributions or student loan interest; you do not claim any credits other than the earned income credit, and you do not owe any household employment taxes on wages you paid to a household employee.
If you do not qualify to use Form 1040EZ, you may be able to use Form 1040A.
Again, you can use Form 1040A if all of the following apply: your income is only from wages, salaries, tips, IRA distributions, pensions and annuities, taxable social security and railroad retirement benefits, taxable scholarship and fellowship grants, interest, ordinary dividends (including Alaska Permanent Fund dividends), capital gain distributions, and unemployment compensation; your taxable income is less than $100,000; your adjustments to income are for only the following items: Educator expenses, IRA deduction, student loan interest deduction,tuition and fees deduction; and you do not itemize your deductions.
You may also use Form 1040A to claim the following tax credits: the credit for child and dependent care expenses; the credit for the elderly or the disabled; the child tax credit; the additional child tax credit; the education credits; the retirement savings contributions credit; the earned income credit; and the adoption credit.
You must meet all of the above requirements to use Form 1040A. If you do not, you must use Form 1040.
If you receive a capital gain distribution that includes unrecaptured section 1250 gain, section 1202 gain, or collectibles (28%) gain, you cannot use Form 1040A. You must use Form 1040.
Form 1040
If you cannot use Form 1040EZ or Form 1040A, you must use Form 1040. You can use Form 1040 to report all types of income, deductions, and credits. You may have received Form 1040A or Form 1040EZ in the mail because of the return you filed last year. If your situation has changed this year, it may be to your advantage to file Form 1040 instead. You may pay less tax by filing Form 1040 because you can take itemized deductions, some adjustments to income, and credits you cannot take on Form 1040A or Form 1040EZ.
You MUST use Form 1040 if ANY of the following apply:
1. Your taxable income is $100,000 or more.
2. You itemize your deductions.
3.You had income that cannot be reported on Form 1040EZ or Form 1040A, including tax-exempt interest from private activity bonds issued after August 7, 1986.
4. You claim any adjustments to gross income other than the adjustments listed earlier under Form 1040A.
5. Your Form W-2, box 12, shows uncollected employee tax (social security and Medicare tax) on tips (see chapter 6) or group-term life insurance (see chapter 5).
6. You received $20 or more in tips in any one month and did not report all of them to your employer. (See chapter 6.)
7. You claim any credits other than the credits listed earlier under Form 1040A.
8. You owe the excise tax on insider stock compensation from an expatriated corporation.
9. Your Form W-2 shows an amount in box 12 with a code Z.
10. You have to file other forms with your return to report certain exclusions, taxes, or transactions.
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