1040EZ Or 1040A: Which Tax Form To Use?

Last updated Jan. 30, 2025 by Charles Zemub

Filing taxes can often feel daunting, especially when choosing the right tax form. For many taxpayers, particularly those with simpler financial situations, deciding between the 1040EZ and 1040A forms has historically been a common consideration. Each form has its specific requirements and benefits, and understanding these can help ensure a smoother, more accurate tax filing process. Let’s delve into the details of each form and determine which is best suited for different situations.

Understanding Form 1040EZ

The 1040EZ form, historically known as the "easy form," was designed for taxpayers with uncomplicated tax situations. However, it’s important to note that the IRS discontinued the 1040EZ form starting with the 2018 tax year, replacing it with the redesigned Form 1040. Despite this change, understanding the 1040EZ can still be useful for historical context and understanding basic tax filing principles. Here’s what made the 1040EZ distinctive:

Simplicity and Eligibility

The 1040EZ form was the shortest and simplest of the federal tax forms, aimed at individuals with straightforward financial situations. It was often used by single or married individuals who didn’t have dependents, and who met the following criteria:

• Taxable income below $100,000.
• Filing status as single or married filing jointly.
• Interest income under $1,500.
• No deductions for student loan interest, education credits, or retirement savings contributions.
• No plans to claim dependents.

Benefits

The primary benefit of the 1040EZ form was its simplicity. The form consisted of a single page and just over a dozen lines to fill out, minimizing the time required for preparation. This made it ideal for young adults or those new to filing taxes who had relatively straightforward financial situations.

Limitations

While straightforward, the 1040EZ had significant limitations. It did not allow for adjustments to income or itemized deductions, such as those for education, student loan interests, or retirement contributions. Tax credits like the Earned Income Tax Credit (EITC) could still be claimed, but only under specific conditions.

Understanding Form 1040A

Before it was discontinued, Form 1040A was known as the "short form." It offered more flexibility than Form 1040EZ and was available for taxpayers who wanted a simplified form but needed certain additional options.

Flexibility and Eligibility

Form 1040A was designed for those who:

• Have a taxable income of less than $100,000.
• Are eligible for deductions relating to IRA contributions and student loan interest.
• Are claiming certain tax credits such as education credits or the Child Tax Credit.
• Do not itemize deductions.

Advantages

The 1040A allowed for more deductions and credits than the 1040EZ. This flexibility was beneficial for middle-income taxpayers who did not own a home or have complex investment or business transactions but still wanted to utilize various credits and deductions.

Limitations

Despite offering more than the 1040EZ, the 1040A still wouldn’t allow for itemized deductions. Taxpayers needing to itemize due to mortgage interest, charitable contributions, or significant medical expenses would need to use the standard Form 1040.

Transition to the New Form 1040 Post-2018

With the 2017 tax reform, the IRS streamlined the tax filing process with the redesigned Form 1040. This change aimed to incorporate the simplicity of the 1040EZ and 1040A while offering the advanced capabilities of the full 1040 through supplementary schedules. Let’s examine this new approach:

Structure of the New Form 1040

The redesigned Form 1040 is shorter than the previous full Form 1040 and serves as the base form that can be expanded through supplemental schedules:

• Schedule 1: For additional income and adjustments, including business income, capital gains, and adjustments such as student loan interest deductions.
• Schedule 2: For additional taxes, including the alternative minimum tax.
• Schedule 3: For non-refundable credits beyond the child tax credit.
• Schedule 4 to 6: Capture other elements relevant to specific taxpayer situations.

Benefits of the New Form 1040

• Consolidation: Reduces confusion by eliminating the need to decide between multiple primary forms.
• Flexibility: Expands according to taxpayer needs through supplemental schedules, thus accommodating both simple and complex tax situations.
• Efficiency: Streamlines reporting, thereby allowing all taxpayers to use a single form, adapting it as needed.

Choosing Between Forms Historically

Before the consolidation into the new Form 1040, deciding between the 1040EZ and 1040A boiled down to evaluating financial situations and filing needs:

Opt for 1040EZ If:

• Your income was straightforward: salary, wages, tips.
• You had no dependents.
• You were not eligible or did not wish to claim many deductions or credits.

Opt for 1040A If:

• You wanted to claim deductions like IRA contributions or student loan interest.
• You qualified for credits that required more extensive reporting than the 1040EZ allowed.
• You wanted more flexibility without itemizing deductions.

FAQs

Q1: Why were the 1040EZ and 1040A forms discontinued?

A1: The IRS revamped the tax filing process in 2018 to simplify it, aiming to reduce confusion and errors by consolidating forms into a single, simpler 1040 form supplemented by schedules as needed.

Q2: What is the benefit of using Form 1040 now?

A2: The new Form 1040 is more versatile, allowing any taxpayer to use the same form base, which can be expanded with attached schedules for reporting various income types and deductions, thereby accommodating a broad range of financial situations.

Q3: What should I do if I previously filed a 1040EZ or 1040A form?

A3: Understand your current income situation and determine if additional schedules are needed with the new Form 1040. If your situation remains simple, the redesigned Form 1040 should suffice for straightforward filing.

Q4: How do I decide if I need additional schedules with my 1040 form?

A4: Review your financial activities for the year: additional income types, complex investments, or eligibility for credits and deductions will indicate which additional schedules are required to properly detail your filing.

Q5: Will using the new Form 1040 affect my tax outcome compared to the old forms?

A5: Your tax outcome depends on your income, eligible deductions, and credits rather than the form itself. The new Form 1040 simply ensures that all necessary information is reported appropriately with its adaptable structure.