Anyone who files taxes each year in the United States recognizes the form 1040. Form 1040A is a shorter version of the more detailed Form 1040. There is also the simplest one for basic tax filing, which is called the 1040EZ. There are different criteria you must meet if you want to use an easier for more than the standard 1040.
Tax Filing Status and Allowed Exemptions
The first thing to figure out when filing Form 1040A is your filing status: single, married filing jointly, married filing separately or head of household. This filing status determines what deductions and tax tables you fall into so you can figure out how much tax you owe. This tax form also requires a list of all possible exemptions.
Your tax filing status as mentioned above, does not change the amount of exemptions you can claim. Exemptions are akin in to deductions on your tax forms. They reduce the amount of income that you have to pay taxes on. Therefore, it is advisable to find as many tax exemptions as you qualify for so you do not have to pay as much money to the government. These exemptions can be associated with you, the tax filer, and your dependents.
Begin filling out IRS form 1040A at the top section which asks for your name, Social Security number and the information for each of your dependents.
Income Allowances for 1040A Forms
Only eight serpent varieties of income can be reported on the 1040A tax form. They are outlined clearly in a list and include: wages and salary, tips, income from interest and capital gains, pension distributions, unemployment and Social Security payments. If of some or all of your income comes from alternate sources, you cannot use form 1040A and must file the longer form 1040. This income could include profits from a business, self-employment income and income from sales.
The next section of form 1040A deals with income adjustments. This is where you can report Ira contributions and education expenses such as interest on student loans and tuition.
Form 1040A Tax, Credit and Payments
Page two of form 1040A deals with deductions to your adjusted gross income. First, you will enter the standard deduction for your filing status. Then, flip to the tax tables and find how much you owe on that amount.
You can then outline a few possible tax credits allowable by the IRS such as child care expenses, credit for disabled or elderly people and various credits for education. These credits are directly subtracted from your tax bill, which means each one will lower the amount you have to pay.
Form 1040A and 1040 Comparison
Form 1040A is much shorter than the 1040 form. It starts out with the same as necessary identification and income information, but limits the types of income up as mentioned above. It also does not list as many possible exemptions and 1040A does not allow for itemized deductions.
If you want to make the entire process much easier and stress free, consider using TurboTax to prepare your tax forms for you. Simply fill in their easy-to-understand tax forms and they will do the rest.