For some taxpayers, tax time is easy -- as in EZ. They are the ones who can use the IRS’s simplest tax form to complete their annual duty. (If you file electronically, the software automatically selects the simplest form for you. E-filing also speeds up the processing of your return and the delivery of your refund.)
Sign up for Tax Tips in your e-mail throughout the filing season
You can use Form 1040EZ if you are single or married with no dependents, you have taxable income of $100,000 or less, and you are younger than age 65. Plus, your taxable interest income from bank accounts and bonds can’t exceed $1,500 in order for you to use the simplest tax-filing form.
The Long and Short of It
If your tax situation is a little more complicated, choose Form 1040A, also known as the short form. You can use this form if your taxable income is $100,000 or less and you do not itemize your deductions.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
However, unlike Form 1040EZ, the short form lets you claim a number of “above the line” deductions, including up to $250 of out-of-pocket expenses for educational supplies if you are a teacher or educational professional; tax-deductible contributions to an IRA; and deductions for college tuition and fees or interest paid on a student loan.
Choosing the short form also allows you to take advantage of a variety of tax credits, which are even more valuable than tax deductions. A tax credit reduces your tax bill dollar-for-dollar; a tax deduction merely reduces the amount of income that is taxed. For example, if you are in the 25% tax bracket, a $1,000 deduction would reduce your tax bill by just $250, but a $1,000 tax credit would slash your tax liability by the full $1,000.
If you have taxable income of $100,000 or more, you itemize your deductions on Schedule A, or you need to file any special forms to report self-employment income, investment gains and losses, or rental or partnership income, you must use Form 1040, also known as the long form.
-
The Rule of $1,000: Is This Retirement Rule Right for You?The rule of $1,000 a month can estimate how much you need to save for retirement. But it assumes an aggressive withdrawal rate.
-
25 Financial Moves to Consider Before December 31Tidying up your financial house before the New Year kicks off will put you in a great position to have a financially satisfying and successful 2025.
-
Are You a Renter? You Could Save on TaxesTax Breaks With these tax savings at your fingertips, rent may be more affordable.
-
2025 Open Enrollment: DACA Recipients Can Purchase Affordable Care Act Health InsuranceOpen Enrollment Over 100,000 people are newly eligible to purchase health insurance from the federal marketplace. Here's what you need to know.
-
Holiday Office Party Taxes: Know Before You GoTax Tips The IRS could tax your gifts from Christmas raffles, Secret Santa, and White Elephant. Here’s how.
-
New Mexico Small Business Saturday Tax Holiday 2024Tax Holiday Here's how you can save on taxes during New Mexico’s Small Business Saturday.
-
Holiday Shopping Tax Tips for Business OwnersTax Deductions Before hitting the sales, businesses should know these key deductions and look out for overspending.
-
Tax Credit vs. Tax Deduction: What’s the Difference?Tax Breaks Your guide to tax deductions and credits, how the IRS treats them differently, and how they impact your tax bill.
-
Premium Tax Credit: Are You Eligible For This Health Insurance Tax Break?Tax Credits The tax credit can help qualifying individuals pay for coverage from the Affordable Care Act’s health insurance marketplace.
-
FSA Contribution Limits Are Higher for 2025FSA A flexible spending account allows you to build tax-free savings for certain medical expenses.
