Find the right fit for tax forms When it comes to tax forms, simple doesn't always mean better. By filing a simple form, taxpayers could be limiting themselves to a lower refund. Taxpayers should file Form 1040 EZ, the simplest tax form, only if the following apply:
* They are using the single or married filing jointly filing status;
* They (and their spouse, if married filing a joint return) are under age 65 and not blind (a special deduction is available to blind individuals);
* They are claiming no dependents;
* Their taxable income is less than $100,000 including no more than $1500 in interest and the balance in wages, salaries, tips, taxable scholarships and fellowships, and unemployment compensation; and
* They claim no tax credits except the earned income credit.
Form 1040A is a simplified version of the full 1040 form. Taxpayers may file the short form only if all if the following conditions apply:
* Their taxable income is less than $100,000 and includes income from the following sources only: Wages, salaries, and tips; interest and dividends; capital gain distributions; scholarships and fellowships; pensions, annuities, and IRA distributions; Social security benefits and Unemployment compensation.
* They claim no adjustments to income except the deduction for student loan interest, educators expense, tuition and fees deduction, or an IRA contribution.
* They do not itemize deductions.
* They claim no tax credits except the credit for child care or disabled-dependent care, the earned income credit, or the credit for the elderly or disabled, child tax credit, education credits, savers credit, or the adoption credit.
They could be better off filing Form 1040 if eligible for certain deductions and/or credits that can be claimed only on the long form. In some cases the law requires taxpayers use this form.
Because taxpayers' situations may change from year to year, they should review which form suits their current tax situation.