What is a 1040A Form?

Those in the US who owe individual taxes or who have earned income usually must file an annual report with the Internal Revenue Service (IRS), which can assure enough taxes were paid or entitle some people to refunds. The three personal forms most used are the 1040EZ, 1040, and 1040A form. Each form is appropriate to specific groups of people, and these forms range in complexity with the EZ being simplest and the 1040 requiring the most work. The 1040A form, which is often dubbed the short form, represents something of a middle ground, allowing personal filers to take a few deductions or credits, which may increase tax savings. It isn’t appropriate to all filers and other people can’t file this form or choose not to.

The 1040A form looks very similar to the 1040. It is missing the areas in which people would itemize deductions, but it does allow for people to file jointly, to claim dependents and to take advantage of certain tax credits. It usually doesn’t take long to complete this form, though all instructions should be carefully reviewed for accuracy, and some people may need to append additional forms or worksheets.

The IRS sets specific guidelines for who can use the 1040A. Generally, income cannot exceed $100,000 US Dollars (USD) and must come from sources like wages for work, retirement funds, or returns on investments. The biggest restriction of the short form is that it means taxpayers cannot itemize their deductions. They’re usually able to take most deductions or credits for which they’re eligible, but they must claim the standard deduction for themselves and any dependents. Even if people plan to use the standard deductions, they usually can’t file the short form if they own businesses or have home offices. In these cases, the 1040 must be filed.

Sometimes it’s mistakenly reported that people with dependents can’t use a 1040A form. While it may be in the best interest for some taxpayers to itemize, any taxpayer meeting income and other requirements is able to claim standard deductions for dependents with the shorter form. The confusion tends to arise because most people aren’t able to use the 1040EZ if they have dependents. The 1040A form for people with low income and dependents would be appropriate, particularly when tax situations are uncomplicated. It is possible to get credit for paying student loan interest for many educational expenses, and for programs like Earned Income Credit without filing the 1040.

In each tax year, taxpayers should determine which 1040 forms can be used and are most advantageous. One way to evaluate this is to understand deductions or credits that can be taken with each form to determine if there are tax advantages to filing a specific type. Sometimes, only the taxpayer and perhaps accountants or other advisers, can determine if it makes sense to itemize, or if complex tax scenarios are best handled with more complex forms. In certain instances, such as if a person exceeds the income allowance or owns a business, the choice is already made.