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Form 1040A: Should You Use It to File Your Return?

By Matthew Frankel, CFP® - Oct 7, 2015 at 11:12AM

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Form 1040a isn't quite as restrictive as the 1040EZ, but it isn't as complicated as the 1040.

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When you file your annual tax return, there are three forms to choose from. The 1040EZ is intended for people with extremely simple tax returns, while the 1040 is the universal form that all individuals can use, no matter how complicated their tax returns are. In the middle is form 1040A, which can allow taxpayers whose returns are too complicated for the 1040EZ to simplify their paperwork at tax time.

What is Form 1040A, and how is it different from the other options?
IRS Form 1040A is a two-page form that's intended for taxpayers whose returns are too complex for Form 1040EZ, but don't quite warrant the use of Form 1040. Form 1040EZ is restricted to those taxpayers with extremely simple situations -- no dependents, no tax credits (other than the Earned Income Tax Credit), and only single and married joint filers can use it. Here are some notable differences between Form 1040A and Form 1040EZ:

  • 1040A allows you to claim exemptions for dependents.
  • You can use 1040A regardless of your filing status (head of household, qualified widow/widower, and married filing separately can use 1040A).
  • Form 1040A allows you to claim adjustments to income, such as for IRA contributions and student loan interest.
  • Form 1040A allows you to claim several tax credits that Form 1040EZ does not, such as the Child and Dependent Care credit and education credits for paying tuition.
  • Form 1040A can be used regardless of age, while the 1040EZ is restricted to those taxpayers under age 65.

Who can use Form 1040A?
Most taxpayers have the ability to use Form 1040A, provided they meet a few general requirements:

  1. Income comes from particular sources, including wages, salaries, tips, interest, dividends, capital gains, pensions, annuities, IRAs, unemployment, Alaska Permanent Fund dividends, and Social Security benefits. Income from a business you own, for example, excludes you from using Form 1040A.
  2. You have no adjustments to income other than educator expenses, IRA deductions, student loan interest, and tuition and fees deductions.
  3. You don't have any uncommon credits to claim. (The IRS provides a full list of the allowable credits on page 12 of the Form 1040A instructions.)
  4. You don't itemize deductions and wish to accept the standard deduction.
  5. Your taxable income must be less than $100,000.

These are the most common, but there are also some less common tax situations that complicate tax returns to the point where form 1040 must be used. For example, if you owe household employment taxes, you must fill out Schedule H with form 1040. And if you're required to pay back the first-time homebuyer credit, you'll need to use the 1040.

Should you itemize?
The biggest difference between Form 1040A and the standard 1040 is that the latter allows you to itemize deductions. If you had substantial expenses for one or more of the following common deductions, it could make sense to itemize:

  • State or local income and sales taxes
  • Real estate taxes
  • Mortgage interest
  • Personal property taxes
  • Charitable donations
  • Moving expenses (for work)
  • Unreimbursed employee expenses (with some restrictions)

So when does it pay to itemize? Depending on your filing status, here's a quick guide to the threshold where it makes sense to itemize your deductions on Form 1040.

Filing Status

If your deductions are greater than this amount, you should itemize

Single

$6,200

Married filing jointly

$12,400

Married filing separately

$6,200 ($0 if your spouse itemizes)

Head of household

$9,100

Qualifying widow(er) with dependent child

$12,400

Note: These figures are for the 2014 tax year. The IRS will release the 2015 standard deductions later this year. Also, if you or your spouse is over 65 or blind, your standard deduction will be higher than what's listed here.

The bottom line
Form 1040A is a good choice for people who have tax situations that are too complicated to use Form 1040EZ but not complex enough to warrant using Form 1040. If your standard deduction is likely to be more beneficial to you than itemizing would be, and you meet the other requirements to use it, Form 1040A could save you some time and effort during tax season.

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