Form 1040A is a simplified version of the standard 1040 income tax form that you file with the IRS to report your annual earnings and calculate federal taxes. Because there are a few different versions of the standard Form 1040, it’s critical to understand which one is right for you. Form 1040A eliminates many of the deductions and tax credits available on the standard Form 1040, but it offers more flexibility on reporting income than the 1040EZ form.
Who Can Use Form 1040A?
If you meet all of the requirements below, you can use from 1040A to file your income tax:
- Your taxable income is less than $100,000
- You do not want to itemize deductions
- Your only income adjustments are classroom or educator expenses, IRA deductions, student loan interest tax deductions, and tuition tax deductions
- Your income only comes from: wages/salaries, tips, interest and dividends, capital gains distributions, taxable scholarship or fellowship grants, pensions, annuities, IRAs, unemployment compensations, taxable Social Security or railroad retirement benefits, or Alaska Permanent Fund dividends
- The only tax credits you intend to claim are: child tax credit, additional child tax credit, earned income tax credit, retirement savings contributions credit, education tax credits, tax credit for child and dependent care expenses, and credits for the elderly or disabled
- You do not have an alternative minimum tax adjustment on any incentive stock options
What is the difference between Form 1040, 1040A, and 1040EZ?
Not sure if form 1040A is the right one for your current financial situation? Learn more about the various 1040 forms below to decide which one best fits your needs.
Form 1040 is the standard annual income tax form that allows you to report detailed information about income, deductions, and credits. It is by far the most flexible of all the annual income tax forms because it allows you to itemize your deductions. Filling out a 1040 form can be a lengthy process, so plan to use it if:
- Your taxable income is $100,000 or more
- You want to itemize deductions and claim tax credits that aren’t permitted on the 1040A or 1040EZ
- You owe household employment taxes
- You have income that includes: unreported tips, self-employment earnings, certain nontaxable distributions, income received as a partner in a partnership, income received as a shareholder in an S corporation, or are a beneficiary of an estate or trust
As stated in the section above, the Form 1040A is simpler than the standard Form 1040 but it places significant restrictions on what you can claim as a deduction. The biggest difference with Form 1040A is that you cannot itemize deductions, such as mortgage interest, which could increase the amount of taxable income you end up with. Take a look at the chart below of the acceptable incomes you can report on Form 1040A.
The Form 1040EZ is the simplest form to complete of the three, but it allows you the least amount of flexibility when reporting income and restricts you from claiming most deductions. Make sure that you meet all of the requirements below before using Form 1040EZ:
- Your taxable income is less than $100,000
- Your filing status is single or married filing jointly
- You are not claiming any dependents
- You don’t claim any adjustments to income or tax credits apart from the earned income credit
- You had only wages, salaries, tips, taxable scholarship and fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends, and your taxable interest wasn’t over $1,500
- Your earned tips, if any, are included in boxes 5 and 7 of your Form W-2
- You don’t owe any household employment taxes on wages you paid to a household employee
- You’re not a debtor in a Chapter 11 bankruptcy case filed after October 16, 2005
- Advance payments of the premium tax credit weren’t made for you, your spouse, or any individual you enrolled in health insurance coverage for whom no one else is claiming the personal exemption
- You, and your spouse if filing a joint return, were under age 65 on January 1, 2018, and not blind at the end of 2017
If you make a mistake and need to change information on your tax return after you’ve sent it, use Form 1040X to amend any of the forms listed above.
How Can Form 1040A Help My College Student?
The 1040A form can be particularly helpful if you have children who are currently in college or are college-bound because it can qualify students for the Simple Needs Test. When a college or university is determining the financial aid package to offer each student, they take into account the Simple Needs Test (SNT) on the FAFSA application.
The SNT can help students receive more financial aid, but students and parents must have less than $50,000 adjusted gross income to qualify. Parents with a less than $50,000 adjusted gross income who might otherwise itemize their deductions on a standard form 1040 might want to consider the benefit of filing with a 1040A to qualify their student for the SNT.
The SNT will appear as a question on the FAFSA application to help schools determine whether assets will be included or excluded when they calculate the Expected Family Contribution (EFC) for the financial aid package. The EFC is the amount of money the family is deemed capable of contributing to their child’s higher education, and the SNT can help lower this number to ease financial stress on families supporting students.
How Can Community Tax Help Me With Form 1040A?
If you need more help deciding which form to use, don’t hesitate to contact us. Our team will help you figure out which one is right for you and ensure that tax season is as stress-free as possible. To date, Community Tax has resolved more than $398,000,000 client tax debts and we continue to strive for excellence when helping taxpayers tackle difficult financial situations. We are a leading national provider in tax resolution, tax preparation, bookkeeping and accounting services—and we’re here to help you.