Category: Tax Tips
How do I File a 1040EZ Tax Return?
Taxes can be complicated. Most people would agree with that statement. And, in many cases, it is true. Taxes are often complicated, even when filed by experienced professionals using advanced tax software.
But taxes don’t need to be complicated for everyone. If you have a simple tax situation, your taxes should be simple. Form 1040EZ was created by the IRS to make sure that is the case.
If you are eligible to file your taxes using form 1040EZ (more on eligibility later), you may be able to greatly simplify your annual tax experience. Will you actually enjoy filing your taxes when you make the switch to 1040EZ? Maybe not—but it certainly can take some of the stress out of your tax life.
What is Form 1040EZ? - If you are looking for a simple 1040EZ definition, this is it: 1040EZ is the shortest tax form you can use to file your annual federal tax return.
Right off the bat, the words "shortest tax form" are sure to draw you in. After all, nobody likes filling out long tax forms. They take up significant amounts of your time, and present more opportunities for mistakes.
The 1040EZ—or "1040 easy" as it is often called—is a great way to simplify your taxes while still meeting all requirements placed on citizens by the federal government. But if this form is so simple, why isn’t it used by all taxpayers? Well, that’s where things quit being simple and start to get a bit complicated.
1040EZ Eligibility - In order to use this form to file your taxes, you first need to make sure you are eligible. Who can use 1040EZ? Those who meet the following criteria, for starters:
* Only those filing with the status of 'single' or 'married filing jointly' are able to use this form. If you intend on filing your taxes under any other status, you will be ineligible for the use of 1040EZ.
* Your taxable income for the year needs to be less than $100,000.
* You cannot claim any dependents on your tax return if you plan to use form 1040EZ.
* If you have taxable interest of more than $1,500, you are not eligible to use this form.
There are other eligibility requirements which must be met, but these are the big exclusions. Obviously, the limitation of not being able to claim dependents on the form is a big one, and will eliminate millions of parents who would have been otherwise able to file using this form.
Tax credits are another important factor to consider when it comes to eligibility for this form. There are only two tax credits you are allowed to claim while filing form 1040EZ—the 'earned income' credit and the 'making work pay' credit. If you are eligible for any other tax credits, and plan to claim those other credits on your return, you won’t be able to use form 1040EZ.
Simple 1040EZ Instructions
The point of form 1040EZ is to keep your tax experience as simple and straightforward as possible. With that said, most people don’t need much in the way of instructions to fill out the form properly. It is self-explanatory for the most part, and even a first-time filer is unlikely to have much difficulty.
However, just to make sure you are prepared to complete the form properly the first time, here are some basic instructions to bear in mind:
* It begins with your info. To get the form started, you will need to fill in all of your relevant personal information. This information includes things like your full legal name, your address, and your social security number.
* Disclose your income. The purpose of a tax form is to disclose your income to the government, and you will do that in the next section. Here you will report your wages or salary earned for the year, along with any tips you may have collected. If there are additional income sources that you need to report for a given tax year, you may need to use form 1040 instead.
* Address payments and credits. Throughout the year, you have probably had federal tax withheld from your paycheck. In this section, you are going to identify how much tax you have already paid through these withholdings. Also, you will claim any tax credits for which you are eligible. As addressed above, the only two credits you can claim on this form are the 'making work pay' credit and the 'earned income' credit.
With just those three basic sections to handle, you will be just about finished with your annual tax return. All that is left is to total everything up and determine whether you owe taxes or are entitled to a refund. Of course, if you file online rather than using a paper form, all of the necessary calculations will be done for you with just the push of a button.
The steps you need to follow to use form 1040EZ are much simpler than full 1040 instructions. As long as you take your time and fill in each piece of information accurately, you should be done with your annual return in just a matter of minutes.
Some Helpful Tips - Before we wrap up this discussion on the simple 1040EZ form, we wanted to leave you with a few basic tips that may be helpful as you start preparing your taxes for the year. Whether you are going to file with form 1040EZ or use a longer form, these tips will come in handy:
* Pay attention to the details. If you are rushing to finish your return—as you might be if you’ve waited until the last possible moment to file—it is likely that you will make a mistake somewhere along the way. Those mistakes tend to come when you are filling out what should be the easy parts of the form. Things like your address and social security number are easy to take for granted when filling out tax forms, but mistakes are common even in these fields. Take an extra moment to double check your work and make sure all of the details are correct.
* Collect all forms in advance. This is one of the best tax tips period. Before you even sit down to work on your taxes, collect all of the relevant forms you are going to need for the job. Having to stop in the middle of the process to track down a form is going to make mistakes more likely. If you are filing with form 1040EZ, it is possible that the only form you will need is your W-2. Once that is in hand, you can get started.
* Save a copy. Be sure to keep a copy of your completed tax forms for your records. If any issues come up down the line, you will want to have that copy on hand to review what you submitted to the IRS.
Form 1040EZ is not an option for most taxpayers, but it is a great choice for those with a simple tax situation. If you meet all of the qualifications for this form, consider using the 1040EZ as a way to take much of the stress out of filing your annual return.