What is the 1040EZ - 1040EZ Form Explained
What is the 1040EZ? The 1040EZ form (aka the EZ form) is the simplest and shortest form you can use to file your federal income taxes. Each year over 20 million people file this form, around 1 in every 6.5 federal tax returns filed. This article explains who can use it, the information required to fill it out, and options for filing it with the IRS.
If you make less than $100K per year, don’t have any dependents, and don’t have a mortgage, then you’re probably eligible to file the 1040EZ. It covers salary and wages from your job (W-2), interest from your bank account (1099-INT), and unemployment income (1099-G). If you're an independent contractor (1099-MISC), have dividend income (1099-DIV), or investment income (1099-B), then you're not eligible to file a 1040EZ.
There are four main sections of the form. Personal information, income you made, taxes you already paid, and your tax refund or balance due.
Just the facts, ma'am. Name, address, date of birth and social security number. Easy breezy. If you're married, you enter the same information for your spouse. Since you can't claim dependents with the 1040EZ, there is no place to record their information. If you're over age 65, you can't file the EZ form unfortunately.
As noted earlier, the 1040EZ covers the most common types of income - wages, salaries, and tips from your employer (reported on Form W-2), interest income from banks and other financial institutions (reported on Form 1099-INT), and unemployment income (reported on Form 1099-G). If you received any of these types of income, these forms will be sent to you by the end of January. For more information about the timing of Tax Year 2014 (filed in 2015), read this article.
Each of the forms you receive will report the taxes you've already paid, or had withheld. Typically taxes are withheld from each paycheck you receive, so your W-2 will list the total amount of tax you've already paid via your job in box 2. It is unusual to have taxes withheld from bank interest or unemployment income, but if they were they will be reported on the 1099-INT or 1099-G you receive.
This is the best part! Most people get a refund, and this is especially true for 1040EZ filers. Your refund or balance due is the calculated by comparing the amount of tax you've already paid vs. what you actually owe. If you're eligible for the earned income credit, it will increase your refund.
You have 3 options for filing your taxes.
The old school way to do your taxes is with pencil and paper. It takes a while and a little math, but you can’t beat the price (it’s free). Download the form from the IRS, grab a calculator, and read the 42 pages of instructions. Wait, never mind. Research shows it takes over 3 and half hours on average to do it by hand.
Pay someone else to do it for you
You can hire a CPA or go to a tax store and pay someone to do it for you. It’s certainly less effort on your part, but you have to pay for it. Around $100, if not more.
Do It Yourself With Your Phone or Computer
There are lots of mobile, online, and software options, many of them quite good. We believe Common Form is the best option for 1040EZ filers and hope you'll give us the chance to earn your business. If you know you're not eligible to file a 1040EZ, we recommend TaxAct. They handle just about any tax situation you can think of.
What Is the Difference Between a 1041, 1040A & 1040EZ?
Form 1040 takes longer to complete but allows for more deductions.
While filing your income taxes may seem complicated, you may find it even more complicated trying to figure out which form to file. The Internal Revenue Service provides three options for personal income tax filing: Form 1040EZ, 1040A and 1040. Form 1041 is the income tax return for estates and trusts. While you'll be required to file form 1041 if you are filing for a trust, what form you choose for your personal taxes will depend on your eligibility to file each form, how beneficial it will be and how much time to you want to spend on your taxes.
Form 1040EZ is the shortest version of the income tax return and, as the name implies, the easiest to complete. However, it is also the most restrictive as to who can file it. You can only file as single or married -- no single, head of household -- and you can't claim dependents. You must have made less than $100,000 and that money can only come from wages, tips, grants, scholarships or unemployment. You can only take the standard deduction and can't claim any other deductions or credits such as for student loan interest, education credits, retirement savings or health care.
In order of filing ease and restrictions, Form 1040A is more comprehensive than the 1040EZ but still a shorter form than the full Form 1040. In addition to the options for 1040EZ, you can file as married filing separately, single head of household or as a qualifying widow(er) with dependent child. You still can't have income greater than $100,000, but that income may be from IRA and pension distributions and capital gains and investment income in addition to the income covered on 1040EZ. While you can't itemize deductions, the form does allow you to claim deductions for IRA contributions and student loan interest and education, child and retirement savings credits.
Form 1040 is the full personal income tax return that anyone can file regardless of the amount of their income. This is the form used for itemizing deductions, claiming first time home buyer credit or if your income exceeds $100,000. Also if you are self employed you are required to complete the full Form 1040. While the form is more complicated, it may also allow you to pay the lowest amount of taxes, depending on the deductions you qualify for.
The 1041 is the income tax return for estates and trusts. An estate or trust is treated as its own entity as far as taxes are concerned. The 1041 includes all income and deductions that are allowed per the IRS guidelines. However any distributions that are made to beneficiaries of the estate or trust are filed on a schedule K-1. The estate or trust does not pay taxes on the distributions to beneficiaries. The tax liability for distributions is reported on the beneficiary's personal income tax return.
Rebecca Burdick began her freelance writing career in 2007 and currently writes for several online publications. She specializes in small business bookkeeping and financial management. Burdick studied accounting and economics at Boise State University and University of California at Riverside.