IRS Form 1040EZ is a Federal Income Tax Form, used to report filing status individual/ married jointly with no dependents to the IRS. 1040EZ Form is the right tax form, whose is not having kids, dependents, home, or didn’t attend college during the year. Filing Form 1040EZ is very easy and less complexity compared with Form 1040 and 1040A.
Residents of the United States of America file the tax return on the Form 1040, Form 1040 A or Form 1040 EZ. This 1040EZ Form can limit the amount of tax to some extent that you have to pay or change the potential size of your tax refund. These three personal income tax forms – 1040, 1040 A, 1040 EZ are designed in such a way that you get the appropriate amount of your money from the IRS. The differences in these forms might cost you if you are not paying any attention.
The Form 1040 EZ is the simplest and the shortest form among them, where Form 1040 A is little complex and Form 1040 is the long one, more detailed and difficult. In general, the longer form gives you more opportunities for tax breaks. So to help you better, this blog is going to provide you the tips to prepare a Form 1040-EZ for the year 2018 tax year. To know more, read on.
2 Filing Status Options
The filing status options available with the Form 1040EZ are single and married filing (jointly). This option is not applicable for the status like the head of the house or the qualifying widow (er). Here both the status demands you to claim at least one dependent, which is not allowed in Form 1040EZ.
The dependent exemptions are really going to save you a significant amount of tax money; it is similar to your deductions. When you have dependents to file along with you, you must use the Form 1040 A and Form 1040 instead. When you are married and want to file separately, then Form 1040EZ is not a better option for you. So do not ignore the dependent exemption in order to save the filing time while preparing the taxes. It is not the right idea.
You Can’t Itemize Deductions on the Form 1040EZ
You cannot itemize deductions on the 1040EZ form. Here you must take the standard deduction instead. These itemizing deductions will be helpful and beneficial when the total value of all your deductions is greater than the standard deduction for your filing status. As you can take the bigger benefit of the two deductions, it is you to determine if you have eligible expenses to itemize before you opt for the 1040 EZ.
In this scenario, the common expenses that are deductible on the Schedule A consist of real estate taxes, mortgage interest payments, unreimbursed employee expenses, charitable contributions, medical and dental expenditures and the state income or sales taxes. When you itemize the deductions more than the standard amount which is allowed, then you will get the benefit by filing a Form 1040 instead of filing the Form 1040EZ.
Deductions for AGI
Generally, the tax of every individual’s tax form calculations are based on the adjusted gross income or AGI, as the reported total income minus specific deductions, which the IRS refers to as adjustments to the income. With the 1040EZ, no adjustments are allowed, hence your AGI will be equal to your total income always.
Therefore, you should not miss the best opportunities to take the deductions, by ignoring the forms and by filling the shorter form for the comfort. To do so, you must familiarize with all the adjustments that are available for the tax year. File the Form 1040-EZ, when you are not eligible to take any of them. In this case, the common adjustments include the traditional IRA contributions, student loan interest, alimony payments and self-employment taxes.
The Form 1040EZ by default has a cap, the total taxable income of the home including your spouse’s income (While filing jointly) must not exceed more than $100,000. The reported income should be from the employment wages, Alaska Permanent Fund dividends, taxable scholarships, unemployment compensation and the total interest earnings of $1,500 or less. In addition to that, you are not eligible to claim any other tax credits except for the earned income credit if you use this Form 1040 EZ. Even after e-filed or mailed, should keep the copy of your federal income tax form returns for at least 3 years.
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