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A Quick Walkthrough Of Tax Return Forms

Posted on 11. Dec, 2009

The three types of federal tax return forms in the USA, from shortest to longest, are:

1040EZ, the “easy” version

1040a, the “short form”

1040, the “long form”

Form 1040EZ, while the shortest and simplest, can only be used under certain very specific conditions. To use this form, you must satisfy the following criteria

A total annual income of under $100,000, and an interest income under $1500

Your filing status must be either single or married filing jointly

If married and filing jointly, both you and your spouse should be less than 65 years in age

Sources of income limited to wages, unemployment benefits, interest and dividends from Alaska Permanent Fund.

You do not have or claim adjustments to income

Not having any deductions other than the standard deduction

Claiming Earned Income Credit

Claiming no other tax credit

Clearly, this list puts most people out of contention for the Form 1040EZ. If you are among this number, consider yourself lucky.

The tax return form that is next in ease of use to 1040EZ is the form 1040A. The 1040A allows taxpayers of greater variety in age, filing status and income adjustments to file a tax return. People who can use the form 1040A must fulfill the following criteria

Total annual income must be less than $100,000

Filing status or age

any

Heads of income

Interest

Wages

Dividends

IRA or pension

Unemployment benefits

Capital gain distributions

Social Security benefits

Adjustments to income must fall within the following list

Penalty incurred due to premature withdrawal from savings

Interest on student loan

Contributions to IRA

Jury Duty pay

Tax credits that can be claimed within form 1040A must be for:

Child and dependent care

Education

Being elderly and disabled

Child tax

EIC

Contribution toward retirement savings

Standard deduction only

If you find that even form 1040A is inadequate for you, or if you are not sure, use the form 1040. The long form becomes mandatory if:

Your income exceeds $100,000

You choose itemized deductions

Your income is from business, agriculture, rentals, partnership, S-corporation, trust etc

You claim tax treaty benefits

You have a foreign income or have paid foreign taxes

You claim income adjustments for education, moving or health investments.

Other than these forms that specify the format for your tax return, you may also need

1. Form 709. This is used to file Gift Tax returns, which are necessary if you give any individual $12000 or more in the financial year

2. TD F 90-22.1, Report of Foreign Bank and Financial Accounts. This report is required to document any reserves great than $10,000 that you may have in foreign financial institutions. This report should be filed by June 30, and is submitted to the US Treasury Department.

The golden rule while choosing tax forms is if you are not sure if a certain detail is eligible under your form, go with form 1040. It may look tough, but it is the safest option.

Related posts:

  1. When You Should Choose the 1040 Tax Return and Why
  2. IRS Forms – How To Use Online Forms?
  3. Choosing your Income Tax return form
  4. Information Reporting Program Committee
  5. What are the benefits filing a 1040 tax return?
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