How to Choose the Right 1040 Form

By Wendy Connick Markets Fool.com

The 1040 form is the central component of an individual tax return. It's so important, in fact, that the IRS offers it in three standard versions, plus a few less common types for unusual circumstances. Picking the simplest version of Form 1040 that applies to your situation can save you a lot of time and effort when filing your tax return.

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1040EZ

The simplest of the three options, Form 1040EZ is available to taxpayers who meet the following criteria:

  • Your filing status is single or married filing jointly.
  • You're not claiming any dependents.
  • You're taking only the standard deduction.
  • You're not claiming any tax credits other than the earned income tax credit.
  • You (and your spouse if filing a joint return) were under age 65 and not blind at the end of the tax year.
  • Your taxable income for the year is under $100,000.
  • You only had income from the following sources: wages, salaries, tips, interest, taxable scholarship or fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends.
  • Your taxable interest was $1,500 or less.
  • Any tips you earned were included on your Form W-2.
  • You don't owe any employment taxes on wages you paid to a household employee.
  • You are not a debtor in a chapter 11 bankruptcy case filed after Oct.16, 2005.
  • Advance payments of the health insurance premium tax credit were not made for you, your spouse, or any individual you enrolled in coverage for whom no one else is claiming the personal exemption.

Form 1040EZ is quite simple to complete (as tax forms go). Many major tax-preparers and online providers will complete a 1040EZ for you at no charge.

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1040A

The middle child in the 1040 lineup, Form 1040A, is available to taxpayers who meet the following criteria:

  • You only had income from the following sources: wages, salaries, tips, interest and ordinary dividends, capital gain distributions, taxable scholarship and fellowship grants, pensions, annuities, IRAs, unemployment compensation, Alaska Permanent Fund dividends, taxable social security and railroad retirement benefits.
  • The only deductions you claim (if any) are educator expenses, IRA deductions, student loan interest deductions, or tuition and fees deductions.
  • You don't itemize deductions.
  • Your taxable income for the year is less than $100,000.
  • The only tax credits you can claim (if any) are the child and dependent care credit, the credit for the elderly or the disabled, education credits, retirement savings contributions credit, child tax credit, earned income tax credit, additional child tax credit, and premium tax credit.
  • You didn't have an alternative minimum tax adjustment on stock you acquired from the exercise of an incentive stock option.
  • You can use this form if you received dependent care benefits or if you owe tax from the recapture of an education credit or the alternative minimum tax.

Though somewhat longer and more complex than Form 1040EZ, Form 1040A is still relatively simple to fill out.

1040

If you don't meet the qualifications for either of the easier forms, you'll need to use the most complex version of all: Form 1040. This form isn't all that complex by itself, but it generally requires quite a few schedules to be completed and submitted along with it, so if you find you need to use Form 1040, consider hiring a professional tax-preparer to do your return.

The oddball 1040s

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In some situations, you may need to use a less common variant of the 1040 form. 1040NR is for nonresident aliens who conducted business within the US. Form 1040X is used to file an amended return for a previous year. And 1040-ES is used to file estimated tax on income that's not subject to withholding, including self-employment earnings, rents, interest, and dividends (don't panic -- you only need to pay estimated taxes if you expect you'll owe more than $1,000 in taxes on non-withheld income for the year). If you have questions about how to complete the 1040 form -- or aren't sure which form is the best one for the current tax year -- seek the advice of a tax professional.

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