Which Forms to File: IRA (Individual retire There are three Tax mentaccount) Forms for Individuals: b. Deductions for a
1040EZ, 1040A and 1040.
- 1040EZ— is simple form which can be used by single people. You may file 1040EZ if:
- You are single.
- You do not claim exemption for age and blindness.
- You do not claim any dependents.
- Your only deduction is from contributions.
(Partial deductions up to $75)
- Your income is only from wages, salaries and tips up to a maximum of 50,000 and you had interest income not more than $400.
- You do not claim any tax credits.
- 1040A — if you do not quality to use 1040EZ, you may be able to use 1040A.
You may be able to use 1040A if:
- Your income is only from wages, salaries, tips and unemployment compensation.
- Your taxable income is less than $50,000.
- You do not itemize deduction.
- Your only deductions are:
- Contributions to a married couple when both work.
- Partial charitable contributions up to $75. 5. Your only credits
- Partial credit for political contributions (Maximum $100)
- Credit for child and dependent care expenses.
- Earned Income credit (if your income is less than $10,000 and have at least one dependent child. You may not be able to use 1040A if you have adjustments to income and credits which you can use only of form 1040.
III. 1040: It may be to your advantage if you use form 1040. You can claim more credits and adjustments to income if you use Form 1040.
You may choose 1040 if:
- Your taxable income is $50,000 or more
- A. Your received tabable Social Security (Your social security may be taxable depending on your income and filing status.)
- You received interest and dividends as nominees.
- You received or paid accrued interest on securities.
- You received any capital gain distribution.
- You choose to reinvest dividends in dividend reinvestment plan.
- You are required to complete part III of Schedule B. If you have interest in financial accounts or trust in foreign countries.
- You had income other than wages, salaries, tips, interest and dividends.
- You file a separate return and your spouse itemizes deductions.
- You had unearned income of more than $1000 and you could be claimed as a dependent on your parents return.
- You were a qualified widow or widow with a dependent child.
- You itemize your deductions.
- You claim adjustments to gross income such as employee business expense, payments to a keog plan, penalty for early withdrawal of savings and alimony paid.
- You made estimated tax payments in 1984. (You paid estimated tax
On income not subject to withholding)
- You want any of your 1984 tax refund go to your estimated tax for
- 12. You’re Income Average. (File Schedule 6)
- You had sale of exchange of Principal residence.
- You underpaid your taxes in 1984 and file form 2210.
- You file form 255. Foreign earned income.
- Your form W2 shows uncollected Social Security tax or tips.
- You received more than $20 tips in any month and did not report them to your employer.
- You pay tax on an IRA.
- You must pay tax on self-employment.
- You claim credits for the elderly and for permanently and totally disabled foreign tax credit investment credit, jobs credit, residential energy credit, and credit for full from nonconventional sources or the credit for increasing research sources.
ON FORM 1040:
From line 7 to 23 you report all taxable income.
From line 24 to 31 you report adjustments to Income.
Line 32 is your adjusted gross income.
One line 34a you report excess itemized deductions.
One line 34b you can take partial credit for contributions if you do not itemize your deductions.
One line 36 you take deduction for exemptions claimed.
Line 40 shows your tax liability before credits and other taxes you may owe.
One line 41 to 49 you claim credits against taxes.
Lines 51 to 55 you report other taxes you may owe.
Adjustments to Income reduce your taxable income by the amount of
Adjustments you can claim. Exemptions Reduce
Your taxable income by excess itemized deductions.
(Itemized deductions less zero bracket amount) and number of exemptions you claimed multiplied by $1000.
Credits — if you can claim any of the credits from line 41 to 49 you can reduce your tax liability by the same amount as credits.
Article extracted from this publication >> February 8, 1985