Update for 2019 Tax Year: In late 2017, President Trump signed a new tax plan into law. This new law consolidated the forms 1040, 1040A and 1040EZ into a single redesigned Form 1040 that all filers can use. For your 2019 taxes, which you file in early 2020, you will use this new 1040. That means you can no longer use the 1040EZ unless you are filing a return for tax year 2017 or earlier.
Form 1040EZ Eligibility
Form 1040EZ was meant to simplify the filing process for filers who had relatively simple tax situations. For tax years 2017 and before, you were eligible to use Form 1040EZ if you met the following criteria:
- Your filing status was single or married filing jointly
- You did not claim anyone as your dependent
- You (and your spouse, if you’re filing jointly) were under age 65 in the relevant tax year, and not blind.
- Your taxable income was less than $100,000
- You had only wages, salaries, tips, taxable scholarship or fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends, and your taxable interest was not over $1,500
- You did not owe any household employment taxes (also known as Nanny Taxes) on wages you paid to a household employee
- You were not a debtor in a chapter 11 bankruptcy case filed after October 16, 2005
- Advance payments of the premium tax credit (for a health plan purchased on the ACA healthcare exchange) were not made for you, your spouse, or any individual you enrolled in coverage for whom no one else is claiming the personal exemption
Should You Use Form 1040EZ?
If you’re filing taxes for 2017 or earlier, you’ll need to meet the eligibility requirements listed above to use the 1040EZ. But just because you’re eligible to use Form 1040EZ doesn’t necessarily mean that you should. Even the IRS acknowledges that some filers may benefit more if they declare their income using Form 1040A or the original (and longest) Form 1040.
If all that matters to you is filing your tax returns as quickly and easily as possible, by all means go for Form 1040EZ. Just know that you might not be getting all the tax credits and deductions for which you’re eligible. If you use Form 1040EZ you can only claim the Earned Income Tax Credit (EITC). Want access to other tax credits? You’re going to need a longer form.
How to Fill Out a 1040EZ
The 1040EZ tax form pretty much lives up to its “EZ” name. It’s only one page! The top of the page is the easiest part. It’s where you put your personal information, including your name, Social Security number and address.
Reporting Your Income
The next section is where you report your income. On Line 1, include the income reported on your Form W-2 and attach your W-2 to the 1040EZ. On Line 2 you should report taxable interest you earned. Remember that if this is more than $1,500 you cannot use Form 1040EZ.
On Line 3, report any unemployment benefits or Alaska Permanent Fund dividend payment you received. On Line 4, add lines 1, 2 and 3 to get your Adjusted Gross Income (AGI). On Line 5, indicate whether someone can claim you (or your spouse if you’re filing a joint return) as a dependent. If so, check the applicable box(es) and enter the amount from the worksheet on the back of Form 1040EZ.
If no one can claim you (or your spouse if you’re filing a joint return), enter the dollar amount indicated on the form, which will be different depending on whether you’re filing singly or jointly. On Line 6, subtract Line 5 from Line 4. If line 5 is larger than line 4, enter 0. The number you enter on Line 6 is your taxable income.
The next section of the form is called Payments, Credits and Tax. On Line 7, write the federal income tax withheld from Form(s) W-2 and 1099. Line 8a is where you put the amount you are eligible to claim in the Earned Income Tax Credit. The IRS has a chart that helps you figure this out.
Line 8b is for the nontaxable combat pay election, applicable to military filers only. According to the IRS, including nontaxable combat pay on your tax returns income may increase or decrease your EITC. The IRS recommends that you compute the credit with and without your nontaxable combat pay before deciding whether to include it on your tax form.
On Line 9, add lines 7 and 8a. These are your total payments and credits. For Line 10, use the amount on line 6 to find your tax in the tax table in the form instructions. Then, enter the tax from the table. On Line 11 you should indicate whether you had full-year health coverage. If not, you will have to enter an individual responsibility payment. For Line 12, add lines 10 and 11. This is your total tax.
Getting a Refund
The next section of the form is for your tax refund. On Line 13a, if Line 9 is larger than line 12, subtract line 12 from line 9. This is your refund. On Line 13b, write the routing number for the bank account where you’d like to receive your refund. Indicate whether it’s a checking or savings account on Line 13c. On Line 13d, write the account number.
What You Owe
Line 14 is for those who owe money. If line 12 is larger than line 9, subtract line 9 from line 12. This is the amount you owe.
Third Party Authorization
In the next section, you can indicate whether you would like to authorize a third party (such as an accountant) to discuss your return with the IRS. If so, write the person’s name, phone number and Personal Identification Number (PIN).
In the next section, you (and your spouse if filing jointly) should sign and date the form and provide your phone number and occupation. The next and last section is used by a paid tax preparer if applicable.
You made it!
Now that you have your questions about Form 1040EZ answered, here’s what else you need to do to get ready for tax season.
- Get your financial life in order with the help of a financial advisor. The SmartAsset matching tool can help you find a financial advisor to work with who meets your needs. First you’ll answer a series of questions about your situation and your goals. Then the program will narrow down your options to up to three financial advisors near you who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with.
- If you’re determined to file your taxes by yourself, make sure you’re using the best programs available. These are the best online tax software programs for 2020, and these are the best free tax programs.
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