Last-Minute Tax Tips: How to Chose the Right Form to File
With just a week to go before April 17, it's crunch time for getting your taxes filed. If you're just now getting started, the first question you have to answer is which form you should use to file.
The EZ Way to File
The simplest IRS tax form is 1040EZ. Either single or joint filers can use Form 1040EZ if they don't claim any dependents, have less than $100,000 in taxable income, and don't have any complicated tax issues like income adjustments due to IRAs or household employment taxes. You can claim the Earned Income Credit, but if you have other credits, then this is the wrong form for you. Similarly, you can earn up to $1,500 in interest income, but if you earn more interest than that or have other types of investment income such as dividends, then you can't use Form 1040EZ. You also can't itemize deductions on Form 1040EZ, so if you'd benefit from itemizing, you'll need to use Form 1040. Find out more about whether you can use Form 1040EZ on pages 5 and 6 of this PDF.
Going to Plan A
If Form 1040EZ doesn't work for you, Form 1040A is the middle-ground choice. Easier than a full 1040, Form 1040A lets you include income from dividends, capital gains, pensions, and unemployment compensation, among other sources. On the deduction side, you can write off IRA contributions, student loan interest, tuition and fees, or educator expenses.
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You still can't earn more than $100,000 in taxable income, but you can claim more credits, including the popular Child and Dependent Care Tax Credit and various education credits. But if you're self-employed, received income from a partnership, or have certain complicated types of income or expenses, then the only way to file correctly is on Form 1040. Get all the details about using Form 1040A on page 11 of this PDF.
The Standard Form 1040: Don't Get Discouraged
Even if you have to file on Form 1040, you shouldn't feel intimidated. Most people won't need to fill out anywhere near every line on the 1040. Moreover, by giving you more chances to save, Form 1040 may not only be the best choice for your filing, but it may also get you the biggest refund. That's reason enough to celebrate as time runs out on the 2011-2012 tax season.
NEXT: Tax Apps For Filers On The Go
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Motley Fool contributor Dan Caplinger is fortunate enough to have gotten his taxes done a little early this year. You can follow him on Twitter here.
