Filing for tax returns and dealing with finances can be an intimidating and overwhelming which goes way beyond which tax form you should file. After all, who has the time to try and understand the tax code, tax brackets, and other esoteric knowledge involved with taxes?
Whether you’re paying tax for personal reasons, if you own a business, or if you own property. If this is the case, you need to spend time learning what’s better, Bonus depreciation or Section 179 – both of which allow taxpayers to deduct the cost of qualifying property in the year it is placed in service. If you owe tax for a business or personal reason, there are many other things to consider and it can all get a bit overwhelming.
When you file for a tax return, you’ll need to list down your annual income and pay the tax according to that, nothing more and not a penny less. If you get it wrong, you could be liable for fines, penalties, and levies. However, there is always a chance that if you play your cards right, you could get a nice tax return. Arrange a legal tax consultation in Los Angeles.
But, when it comes to filing for a tax return, the main confusion comes from having to determine which tax form to file for the tax return. There are dozens of forms available on the IRS website that are used for specific kinds of income. So, how do you know which one to file? Well, below, we’ll look at three common forms: the 1040, 1040A, and 1040EZ.
Which tax form is right for you…
Don’t break a sweat; we will help you determine which tax form you need. If your goal is to do your taxes on your own, you’ll need to do your due diligence.
There are three main forms: 1040, the 1040A and, 1040EZ. Let’s learn more about them so that you can pick out the one that makes the most sense for your tax situation.
1040
This is the most complex of the tax forms available to single filers. With that said, it also gives you the greatest range of deductions and credits to choose from. You can use the Form 1040 if your income is more than $100,000, you itemize deduction, and you received income in the form of a sale of property or if you are part of a trust.
1040A
To file a 1040 A, you’ll need to make less than $100,000. The 1040A offers more tax breaks compared to the 1040EZ, but it limits the amount of deductions and credits compared to the regular 1040.
1040EZ
The is the easiest and probably the most filed form when it comes to tax filing. But why is that? It’s because the criteria for 1040EZ is quite flexible, and a lot of people fall under it.
You can fill out the 1040EZ form only if:
- Your relationship status is single, or you are married and filing together.
- If you do not have any individual as your dependant.
- You are under 65.
- Your yearly taxable income was not more than $100000.
- If your income only consists of salaries, scholarships, or other similar compensation.
- Your taxable interest is not more than $1500.
Keep in mind that this criterion is updated to the year 2020, things were a little different back in 2017-2018.
Why people use the 1040EZ
The 1040EZ was created for taxpayers who have simple tax situations. Form 1040EZ lets taxpayers claim income from salaries, taxable grants, tips, wages, and scholarships. 1040EZ only has a few credits or deductions that are available to reduce your taxable income. Form 1040EZ is also very short compared to other tax forms like the Form 1040. In fact, the 1040 Form has 80% more lines compared to the 1040EZ.
You can fill out your 1040EZ online or manually by paper.
Conclusion: Learning which tax form is right for you
Although taxes can be a tricky subject that nobody really wants to learn, they are an unavoidable part of adult life. However, you can use a tax pro to help you if you have a complicated tax situation and need the assistance to choose the right tax form and beyond. It is better to rely on a professional who can guide you through your taxes rather than risking doing it incorrectly and then being on the hook for expensive tax penalties. Uncle Sam expects us to pay our taxes, so make sure you take the time to understand which form makes sense for your situation.
Pro Tip: Keep your tax payments, tax information, and pay stubs during the year to make tax season easier. You can file them away in a storage cabinet or file holder.
Use this article as a jumping off point to choose the right tax form and submit your tax return. Before you know it, you’ll have your taxes ready to go and filed! And who knows? Maybe you’ll even get a nice, big tax return for your efforts!
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