Filing your taxes can be stressful and confusing. It’s challenging to navigate tax season with so many considerations like different tax forms, credits, deductions and income sources. If you have a relatively simple tax situation, you might qualify for form 1040A. This filing is the sweet spot between the long-winded and complex form 1040 and the easy-breezy simple form 1040EZ. With IRS form 1040A, you are able to claim a few deductions and credits, but you cannot fully itemize your deductions. Further, the 1040A form is just two pages long. And unlike the customizable 1040, it requires little documentation. This form can be completed in a relatively short period. However, before you get started with your filing, there are a few things you need to understand first.
A typical 1040 form is the most common tax filing. It includes investments, tax credits, itemized deductions and is ideal for those with higher incomes. Form 1040 is incredibly detailed, and requires quite a bit of documentation and time. However, if your tax situation is relatively simple, you might consider filling out a 1040A form instead. IRS 1040A instructions are relatively basic and straightforward. A 1040A is a two-page form that allows you to report income and take a few deductions and credits. You must include the following information on a form 1040A:
- Income: You must include all taxable income on a form 1040. Eligible income includes wages, salaries, dividends, tips, capital gain distributions, unemployment benefits, pensions, Social Security or railroad retirement benefits, interest, annuities, taxable scholarships and grants and Alaska Permanent Funds dividends. Note that if your tax year income exceeds $100,000, you are not eligible for a form 1040A and you must instead fill out the longer form 1040. If you have any business income, you must fill out IRS form 1040. Further, if you utilized any ISOs during the tax year, that also excludes you from form 1040A, and requires that you fill out the more detailed 1040.
- Deductions: Form 1040A instructions specify that you can include a few tax deductions on your form to lessen your tax burden. These deductions include IRA contributions, student loan interest, tuition and fees and classroom expenses. Understand that form 1040A does not allow you to deduct charitable giving, mortgage interest, medical expenses or business expenses. If you plan to itemize your deductions, you need to file form 1040 instead.
- Credits: Form 1040A does allow for a few tax credits, although they are limited. Credits you can claim include child and dependent care, elderly and disabled credits, education, child tax credits and retirement savings contribution.
- File by the deadline: You must file Form 1040A by its deadline. For filing your taxes for the year 2017, the deadline is April 17, 2018. For filing your taxes for the year 2018, the deadline is Monday, April 15, 2019.
Form 1040A shouldn’t take too long to complete since it’s only two pages long. Also, it requires minimal documentation. For example, filers who plan to itemize their deductions must often provide documentation for their expenses, which means saving receipts, bills, invoices and other documentation of expenses. When you file Form 1040A, you won’t be itemizing deductions. Therefore, you don’t need loads of documentation. You just need your proof of income forms and your basic information.
Once you have filled out your income, deductions and credits, you’re good to go. You can file your taxes either by mailing them or electronically submit them to the IRS, or submit them through a tax service such as TurboTax or H&R Block. Be sure to file by the deadline, and pay any fees associated with filing that you owe.
1040A Eligibility Requirements
You might be wondering “can I file a 1040A?” The truth is, a 1040A tax form is not for everybody. There are a few requirements you must meet before deciding to use this form. The following are the most basic 1040A eligibility requirements:
- Your taxable income is less than $100,000: This is pretty self-explanatory. Your taxable income must be less than $100,000 if you are going to file an IRS 1040A form. That income can come from wages, a salary, dividends, tips, capital gains, unemployment benefits, a pension, Social Security, retirement benefits, interest, annuity or a scholarship or grant. If your income exceeds $100,000, you will need to fill out the longer Form 1040. If you have business income, that also requires Form 1040.
- You do not own a business: Another requirement to fill out a 1040A tax form is that you must not own a business. The truth is, owning a business complicates your tax situation, and requires a more in-depth return than the 1040A can provide. If you own a business, you will have to fill out a regular 1040 form.
- You don’t plan to itemize deductions: If you want to use Form 1040A, you cannot itemize deductions. You must take a standard deduction. If you plan to itemize your deductions for whatever reason, you will need to choose a different IRS tax form.
- You did not utilize any ISOs during the tax year: If you used any incentive stock options during the tax year, you are not eligible for a Form 1040A. You are then required to use the regular 1040 form.
Note that no matter whether you are filing as single, married filing separately, married filing jointly, head of household or widowed, you can fill out Form 1040A if you fulfill the requirements. Keep in mind that even if you fit all these requirements, a tax Form 1040A might not be the right fit for you. Be sure to explore all relevant options before choosing which IRS form to file. If you are unsure, contact a tax professional for assistance.
Difference Between 1040, 1040EZ and 1040A Forms
If you are wondering, “do I use 1040 or 1040a?” you’re not alone. It's a common tax question. When you use tax preparation software, you are automatically sorted into using one of these three forms based on the information you provide. Still, it’s helpful to understand the different tax forms, and what each option offers. There are three main tax filing options: Form 1040EZ, Form 1040A and Form 1040. While Form 1040 is the most common, that doesn’t mean it’s right for everyone. For those with simpler tax filings, Form 1040EZ or 1040A might be the right fit. So, what’s the difference and which is best for you?
1040EZ: Tax Form 1040EZ is the simplest option. With this filing, you are not eligible to claim credits or deductions, except for the standard deduction, the Earned Income Tax Credit. Because this form is so easy to fill out, you can file it for free with many tax preparation companies. Note that this option is only available to those with the filing status of single or married filing jointly. This form is the least customizable and is best for people with straightforward tax situations. Form 1040EZ might be for you if:
- Your taxable income totals less than $100,000.
- You are filing either single or married and jointly and won’t claim any dependents.
- You and your spouse are under the age of 65.
- You earned your income solely from salaries, tips, wages, scholarships and grants, unemployment benefits or Alaska Permanent Fund dividends.
- Your interest earned was below $1,500 for the tax year.
- You don’t owe employment taxes on wages you paid to an employee of your household such as a housekeeper or nanny.
- You don’t plan to claim any credits or deductions, except for the standard deduction.
1040A: Form 1040A is still simple, but you can utilize a few credits and deductions, albeit with limitations. This two-page form is good for those who have qualifying income below $100,000 and only need to access the major credits and deductions. Think of this as the middle option, not too complicated and not too simple. Form 1040A might be for you if:
- Your taxable income totals less than $100,000.
- You do not plan to itemize deductions.
- You plan to claim credits only for child and dependent care, elderly and disabled credits, education, child tax credits and retirement savings contribution.
- You only plan to deduct IRA contributions, student loan interest, tuition and fees and classroom expenses.
- Your income comes solely from wages, salaries, dividends, tips, capital gain distributions, unemployment benefits, pensions, Social Security or railroad retirement benefits, interest, annuities, taxable scholarships and grants and Alaska Permanent Funds dividends.
- You did not exercise an ISO in the tax year.
1040: With Form 1040, you can claim unlimited credits and deductions. Anyone can file 1040 no matter their filing status. This form will take longer to fill out and may require more documentation than the other two, but it also has the most opportunity for reducing your tax burden. Ultimately, this form is customizable and designed to get you the maximum tax return possible. Note that if you made more than $100,000 in the tax year, Form 1040 is your only option. Form 1040 might be for you if:
- Your taxable income exceeds $100,000.
- You received income that is not included on forms 1040EZ or 1040A, such as being the beneficiary of a trust or estate, unreported tips, self-employment earnings, income received as a partner or shareholder in an S corporation or other certain nontaxable distributions.
- You plan to itemize deductions and claim credits.
- You owe household employment taxes.
New 1040 Form is Coming
In the summer of 2018, the IRS released a statement that it plans to shorten and simplify Form 1040, and eliminate forms 1040A and 1040EZ for 2019. The new 1040 will be about half the length of its current version. The IRS is working with the tax community to create this new 1040 to make filing easier for all Americans. When implemented, the new 1040 form will be filed by all 150 million taxpayers in the U.S.
The new 1040 form will consolidate forms 1040EZ, 1040A and 1040 into one form that takes a building block approach. In practice, this means that the new 1040 will be simple at its core, and will require supplementing the form with schedules for more complex tax situations. For those with simple tax setups, no additional schedules will be required. This new universal form is meant to streamline filing operations for the IRS. The new form will also help ensure a smooth transition for taxpayers familiar with software products and the interview process used to prepare tax returns. Since nine out of 10 Americans use tax filing software, the new form will require the major tax preparers to get onboard with the system. This is why the IRS has yet to release a copy of the new Form 1040. They are still workshopping and tweaking it to ensure that tax preparers are prepared for the new system.
Chelsea Levinson earned her B.S. in Business from Fordham University and her J.D. from Cardozo. She has been writing professionally for more than ten years. She has created personal finance content for Bank of America, H&R Block, Huffington Post and more.