Which Tax Form Should I Use?

08.02.2010 | Author: ustax | Posted in United States

You must use one of three forms to file your return: Form 1040EZ, Form 1040A, or Form 1040.

See the discussion under Form 1040 for when you must use that form.

Form 1040EZ

Form 1040EZ is the simplest form to use.

You can use Form 1040EZ if all of the following apply.

  1. Your filing status is single or married filing jointly. If you were a nonresident alien at any time in 2009, your filing status must be married filing jointly.
  2. You (and your spouse if married filing a joint return) were under age 65 and not blind at the end of 2009. If you were born on January 1, 1945, you are considered to be age 65 at the end of 2009.
  3. You do not claim any dependents.
  4. Your taxable income is less than $100,000.
  5. Your income is only from wages, salaries, tips, unemployment compensation, Alaska Permanent Fund dividends, taxable scholarship and fellowship grants, and taxable interest of $1,500 or less.
  6. You did not receive any advance earned income credit (EIC) payments.
  7. You do not claim any adjustments to income, such as a deduction for IRA contributions or student loan interest.
  8. You do not claim any credits other than the earned income credit or the making work pay credit.
  9. You do not owe any household employment taxes on wages you paid to a household employee.
  10. You are not claiming the additional standard deduction for real estate taxes, taxes on the purchase of a new motor vehicle, or disaster losses.

You must meet all of these requirements to use Form 1040EZ. If you do not, you must use Form 1040A or Form 1040.

Figuring tax. On Form 1040EZ, you can use only the tax table to figure your tax. You cannot use Form 1040EZ to report any other tax.

Form 1040A

If you do not qualify to use Form 1040EZ, you may be able to use Form 1040A.

You can use Form 1040A if all of the following apply.

  1. Your income is only from wages, salaries, tips, IRA distributions, pensions and annuities, taxable social security and railroad retirement benefits, taxable scholarship and fellowship grants, interest, ordinary dividends (including Alaska Permanent Fund dividends), capital gain distributions, and unemployment compensation.
  2. Your taxable income is less than $100,000.
  3. Your adjustments to income are for only the following items.
    1. Educator expenses.
    2. IRA deduction.
    3. Student loan interest deduction.
    4. Tuition and fees deduction.
  4. You do not itemize your deductions.
  5. Your taxes are from only the following items.
    1. Tax Table.
    1. Alternative minimum tax.
    2. Advance earned income credit (EIC) payments, if you received any.
    3. Recapture of an education credit.
    4. Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,900.
    5. Qualified Dividends and Capital Gain Tax Worksheet.
  2. You claim only the following tax credits.
    1. The credit for child and dependent care expenses.
    2. The credit for the elderly or the disabled.
    3. The child tax credit.
    4. The additional child tax credit.
    5. The education credits, including the refundable American opportunity credit.
    6. The retirement savings contributions credit.
    7. The earned income credit.
    8. The making work pay credit.
    9. The government retiree credit.
  3. You did not have an alternative minimum tax adjustment on stock you acquired from the exercise of an incentive stock option. (See Publication 525, Taxable and Nontaxable Income.)

You must meet all of the above requirements to use Form 1040A. If you do not, you must use Form 1040.   If you meet the above requirements, you can use Form 1040A even if you received employer-provided dependent care benefits or claim the additional standard deduction for real estate taxes paid or for taxes paid on the purchase of a new motor vehicle. If you receive a capital gain distribution that includes unrecaptured section 1250 gain, section 1202 gain, or collectibles (28%) gain, you cannot use Form 1040A. You must use Form 1040.

Form 1040

If you cannot use Form 1040EZ or Form 1040A, you must use Form 1040. You can use Form 1040 to report all types of income, deductions, and credits.

You may have received Form 1040A or Form 1040EZ in the mail because of the return you filed last year. If your situation has changed this year, it may be to your advantage to file Form 1040 instead. You may pay less tax by filing Form 1040 because you can take itemized deductions, some adjustments to income, and credits you cannot take on Form 1040A or Form 1040EZ.

You must use Form 1040 if any of the following apply.

  1. Your taxable income is $100,000 or more.
  2. You itemize your deductions.
  3. You had income that cannot be reported on Form 1040EZ or Form 1040A, including tax-exempt interest from private activity bonds issued after August 7, 1986.
  4. You claim any adjustments to gross income other than the adjustments listed earlier under Form 1040A.
  5. Your Form W-2, box 12, shows uncollected employee tax (social security and Medicare tax) on tips  or group-term life insurance.
  6. You received $20 or more in tips in any 1 month and did not report all of them to your employer.
  7. You were a bona fide resident of Puerto Rico and exclude income from sources in Puerto Rico.
  8. You claim any credits other than the credits listed earlier under Form 1040A.
  9. You owe the excise tax on insider stock compensation from an expatriated corporation.
  10. Your Form W-2 shows an amount in box 12 with a code Z.
  11. You had a qualified health savings account funding distribution from your IRA.
  12. You are an employee and your employer did not withhold social security and Medicare tax.
  13. You have to file other forms with your return to report certain exclusions, taxes, or transactions.
  14. You are a debtor in a bankruptcy case filed after October 16, 2005.
  15. You have a net disaster loss attributable to a federally declared disaster, even if you are claiming the standard deduction.
Table 1-3.Other Situations When You Must File a 2009 Return

If any of the four conditions listed below applies, you must file a return, even if your income is less than the amount shown in Table 1-1 or Table 1-2.
1. You owe any special taxes, including any of the following.
•
•

•
•
•

•
•

•
•
•
•
•
•
•

 Social security or Medicare tax on tips you did not report to your employer.
Social security or Medicare tax on wages you received from an employer who did not withhold these taxes.
Uncollected social security, Medicare, or railroad retirement tax on tips you reported to your employer.
Uncollected social security, Medicare, or railroad retirement tax on your group-term life insurance. This amount should be shown in box 12 of your Form W-2.
Alternative minimum tax.
Additional tax on a qualified retirement plan, including an individual retirement arrangement (IRA).
Additional tax on an Archer MSA or health savings account. (See Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.)
Additional tax on a Coverdell ESA or qualified tuition program. (See Publication 970, Tax Benefits for Education.)
Recapture of an investment credit or a low-income housing credit. (See the Instructions for Form 4255, Recapture of Investment Credit, or Form 8611, Recapture of Low-Income Housing Credit.)
Recapture tax on the disposition of a home purchased with a federally subsidized mortgage.
Recapture of the qualified electric vehicle credit.
Recapture of an education credit.
Recapture of the Indian employment credit. (See the Instructions for Form 8845, Indian Employment Credit.)
Recapture of the new markets credit. (See Form 8874, New Markets Credit.)
Recapture of alternative motor vehicle credit. (See Form 8910, Alternative Motor Vehicle Credit.)
Household employment taxes. (See Schedule H (Form 1040), Household Employment Taxes.)
2. You received any advance earned income credit (EIC) payments from your employer. This amount should be shown in box 9 of your Form W-2.
3. You had net earnings from self-employment of at least $400.
4. You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. (See Publication 334.)

Does My Return Have To Be on Paper?

You may be able to file a paperless return using IRS e-file (electronic filing). If your 2009 adjusted gross income (AGI) is $57,000 or less, you are eligible for Free File. If you do not qualify for Free File, then you should check out www.irs.gov for low-cost e-file options or Free File Fillable Forms.

IRS e-file

Table 1-4 lists the benefits of IRS e-file. IRS e-file uses automation to replace most of the manual steps needed to process paper returns. As a result, the processing of e-file returns is faster and more accurate than the processing of paper returns. However, as with a paper return, you are responsible for making sure your return contains accurate information and is filed on time. Using e-file does not affect your chances of an IRS examination of your return.

Free File Fillable Forms. If you do not need the help of a tax preparer, then Free File Fillable Forms may be for you. These forms:

  • Do not have an income requirement so everyone is eligible,
  • Are easy to use,
  • Perform basic math calculations,
  • Are available only at www.irs.gov, and
  • Apply only to a federal tax return.
Electronic return signatures. To file your return electronically, you must sign the return electronically using a personal identification number (PIN). If you are filing online using software, you must use a Self-Select PIN. If you are filing electronically using a tax practitioner, you can use a Self-Select PIN or a Practitioner PIN.
Self-Select PIN. The Self-Select PIN method allows you to create your own PIN. If you are married filing jointly, you and your spouse will each need to create a PIN and enter these PINs as your electronic signatures.   A PIN is any combination of five digits you choose except five zeros. If you use a PIN, there is nothing to sign and nothing to mail—not even your Forms W-2.   To verify your identity, you will be prompted to enter your adjusted gross income (AGI) from your originally filed 2008 federal income tax return, if applicable. Do not use your AGI from an amended return (Form 1040X) or a math error correction made by the IRS. AGI is the amount shown on your 2008 Form 1040, line 38; Form 1040A, line 22; or Form 1040EZ, line 4. If you do not have your 2008 income tax return, call the IRS at 1-800-829-1040 to get a free transcript of your return. (If you filed electronically last year, you may use your prior year PIN to verify your identity instead of your prior year AGI. The prior year PIN is the five digit PIN you used to electronically sign your 2008 return.) You will also be prompted to enter your date of birth (DOB). Make sure your DOB is accurate and matches the information on record with the Social Security Administration by checking your annual social security statement.
Table 1-4Benefits of IRS e-file

• Free File allows qualified taxpayers to prepare and e-file their own tax returns for free.
• Free File is available in English and Spanish.
• Free File is available online 24 hours a day, 7 days a week.
• Get your refund faster than paper filers do, in as little as 10 days with Direct Deposit.
• Sign electronically with a secure self-selected PIN number and file a completely paperless return.
• Receive an e-mailed proof of receipt within 48 hours after the IRS receives your return.
• If you owe, you can e-file and authorize an electronic funds withdrawal or pay by credit card. You can also file a return early and pay the amount you owe later.
• Save time by preparing and e-filing federal and state returns together.
• IRS computers quickly and automatically check for errors or other missing information.
• Help the environment, use less paper, and save taxpayer money—it costs less to process an e-filed return than a paper return.

You cannot use the Self-Select PIN method if you are a first-time filer under age 16 at the end of 2009.

Practitioner PIN. The Practitioner PIN method allows you to authorize your tax practitioner to enter or generate your PIN. The practitioner can provide you with details.
Form 8453. You must send in a paper Form 8453 if you are attaching or filing Appendix A of Revenue Procedure 2009-20, Forms 1098-C, 2848 (for an electronic return signed by an agent), 3115, 3468 (if attachments are required), 4136 (if certificate or statement required), 5713, 8283 (if a statement is required for Section A or if Section B is completed), 8332 (or certain pages from a decree or agreement that went into effect after 1984 and before 2009), 8858, 8864 (if certification or statement required), 8885, Schedule D-1 (Form 1040) (if you elect not to include your transactions on the electronic STCGL or LTCGL records).

Power of attorney. If an agent is signing your return for you, a power of attorney (POA) must be filed. Attach the POA to Form 8453 and file it using that form’s instructions.
State returns. In most states, you can file an electronic state return simultaneously with your federal return.
Refunds. You can have a refund check mailed to you, or you can have your refund deposited directly to your checking or savings account or split among two or three accounts. With e-file, your refund will be issued faster than if you filed on paper. As with a paper return, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support.
Refund inquiries. You can go online to check the status of your refund 72 hours after the IRS acknowledges receipt of your e-filed return.

Amount you owe. To avoid late-payment penalties and interest, pay your taxes in full by April 15, 2010. You can make your payment electronically by credit or debit card or by scheduling an electronic funds withdrawal from your checking or savings account.

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