When It Comes to 1040 Tax Forms, Which Is Right for You?

Plenty of Americans greet tax season every year with a sense of dread because they are still not very comfortable with how the system works, especially when dealing with the Federal IRS. If you find yourself unnerved by the process of filing taxes then there is some good news. Choosing which of the federal 1040 tax forms is right for you is actually quite a bit simpler than it may first appear. The whole key here is understanding the basics of the primary forms. These primary forms are Form 1040EZ, Form 1040A and Form 1040. One of these will work for you, so understanding what your options are will help you select the form that is going to work best for your personal financial situation. A good general rule of thumb is to stick with the simplest form for your situation if you want your return to be processed faster. As its name implies, Form 1040EZ is the easiest form to file and when you choose this route you can expect a fairly simple filing process. Those who wish to file a 1040EZ will need to be filing under a status of either Single or Married Filing Jointly and both spouses will need to be under the age of 65 to use this form. Your total income from wages, unemployment benefits or interest must be below $100,000 and you may not earn over $1,500 per year in interest and still use the 1040EZ. The reason this form is so simple is because it does not allow you any adjustments to income. You will be allowed to claim the Earned Income Credit, but other than this no other tax credits or deductions are allowed. Remember, of all the 1040 tax forms, this one is processed most quickly, but that is due to the fact that you are choosing not to claim deductions or add additional complexities to the return. The next step up is the 1040A which is also called the 'short form'. As with the 1040EZ, you may not earn over $100,000 in a single year and still be eligible for this form, but you are able to report dividends and distributions from capital gains, an IRS or pension fund. In addition to wages, interest and unemployment compensation, you can also report any Social Security benefits you have received. There are far more deductions and tax credits that you claim with this form and any age or filing status works with the 1040A. Most of those paying taxes can be eligible for this form. Finally, Form 1040 or the 'long form' will work for any taxpayer so if you have complicated tax situations from income such as an S-corporation or farm, this is the way to go. When in doubt, out of all the 1040 Tax Forms, this one is the most comprehensive.

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