If you took the walk down the aisle last year and now have to deal with a whole new set of income tax rules, or if you are considering a change in your filing status because of a modification of your income, you’ll have a lot to decide before April 15 rolls around. Married filing jointly may be the best option for your newly established life as a couple or for that change in income parameters. After making the filing status decision your next option is determining which IRS form adequately addresses your needs.
Filing with Form 1040EZ, is just that, E-Z. However, there are limitations to its use. Be sure you go over the checklist provided with the Form 1040EZ instructions, which explains its restrictions as a filing vehicle. For instance, you must file as single or married filing jointly; you cannot have dependents; your taxable income must be less that $100,000 and you must not have received advance earned income credits, to name a few. Make sure you qualify for Form 1040EZ use before setting down any figures.
Most couples can benefit from the additional deductions available with Form 1040A. You can use this form for married filing jointly if your taxable income is less that $100,000, and you determine it will not benefit you to itemize deductions. Other criteria, explained in the form instructions provided by the IRS, are applicable for Form 1040A use. The directions ask six questions, ranging from establishing your sources of income to determining whether you or your spouse received “an alternative minimum tax adjustment on stock you acquired from the exercise of an incentive stock option.” Use Form 1040A only if its restrictions work in your best interests.
If restrictions applicable to forms 1040EZ and 1040A make their use impossible for you, Form 1040 is the way to go. When your filing status is married filing jointly and you or your spouse have self-employment income, of if one of you exclude foreign-earned income you received or you are claiming the adoption credit, you must use Form 1040. Instructions for Form 1040A list other requirements for using Form 1040. This filing form is the most comprehensive and, for most taxpayers, the best way to limit tax liability.
Selecting which tax form you’ll use is just one of many decisions made each year by American taxpayers. As a couple you may choose to prepare your taxes yourself, consult with a professional or make use of tax preparation software available online and at major retailers. Whether you choose the do-it-yourself approach or enlist the services of a tax professional be sure you have the figures right the first time. Keep in mind that as joint filers, you are jointly responsible for all the entries on your return.
Cheryl Withrow is a writer in Michigan’s untamed Upper Peninsula. Following a teaching career she served alternately as editor of the "Washington County News" and the "Geneva County Reaper," and as associate editor of "Bay Life" magazine. Withrow holds a Bachelor of Science in business with a major in accountancy from Wright State University and a Bachelor of Arts in English from Ohio University.