If you want to use one of the simpler versions of the federal individual tax return you have a choice of the 1040EZ or the 1040A. The 1040EZ is for people who don’t have kids and won’t be claiming any deductions other than the standard and no credits.
Deductions You Can Claim on the IRS 1040A
IRS form 1040A lets you claim deductions that you can’t on the 1040EZ but you still can’t itemize. You can claim the following deductions, however. None of these can be claimed if you are using the EZ form.
- The IRA deduction. Contributions to a traditional IRA (Individual Retirement Account) can be deducted from your taxable income on the IRS 1040A.
- Education expenses deduction: tuition and fees can be deducted on the IRS 1040A.
- Student Loan Interest Deduction: you can deduct the amount of money you spent on qualified student loan interest on the 104oA.
- Educator expenses: if you are a teacher and you buy your own supplies then the 1040A allows you that deduction
Credits You Can Claim on the IRS 1040A
You can’t claim any credits except the Earned Income Credit with the 1040EZ. The IRS 1040A, however, lets you claim some tax credits:
- child/dependent care expenses
- education credits
- the child tax credit
- the additional child tax credit
- credit for elderly or disabled
- the retirement savings contribution credit
Basically, the IRS 1040A is the simple EZ form plus deductions and credits that have anything to do with dependents, education or retirement. Theses are common types of tax credits and deductions, more commonly claimed than others, so by developing the 1040A the IRS hopes to keep it simple even for taxpayers who claim just a few adjustments to income.
You Can Use the 1040A If…
- Your adjusted gross income is less than $100,000.
- You don’t itemize your deductions.
You Can’t Use the 1040A If…
- You had some self-employment activity during the tax year.
- You had some Schedule K passive income from being a shareholder in an S Corporation
- You inherited some money from a trust or an estate
- You hired a nanny or other type of household employee
- You want to itemize your deductions (i.e. you had some pretty hefty medical expenses, you gave lots of money to charity, etc)
Why You Don’t Need to Know Any of This …
If you use commercial tax preparation software such as TaxAct or TurboTax, the software will choose which form of the IRS 1040 you should use: the EZ, the A or the long form. There’s not a lot of difference between the simplest individual tax return form the 1040EZ, and the 1040A. The EZ is one page long and the IRS 1040A is two pages long. The long form is two pages but has lots and lots of Schedules attached to it so it’s very long.