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Video: Tax Tips for the 1040EZ IRS Form

Updated for Tax Year 2016


OVERVIEW

Nothing to deduct? The IRS has just the form for you. In this video you will learn if you qualify to file your taxes with form 1040EZ and tips for filing.


Hello, I’m Lisa Lewis from TurboTax with important news about filing your taxes on the 1040EZ form.

If you are like most taxpayers, the less time you spend preparing your income tax return, the better. Luckily, if you don’t anticipate deducting any expenses or aren’t eligible for most tax credits, you can prepare your taxes pretty quickly by using the 1040EZ form. There are, however, some tax tips you may want to consider before choosing to file on the 1040EZ.

If you are unmarried and considering using the 1040EZ, you will be required to use the single filing status. You may want to check if you are eligible to file as head of household – the additional tax savings may be worth the extra time. The benefit of filing as head of household is the larger standard deduction it provides you with in comparison to the single filing status.

If you do have the option of filing as head of household, the additional tax savings may be worth the extra time it will take to file on the 1040A or 1040. Reporting dependents and claiming exemptions for them is a common way for taxpayers to reduce their tax bill. But when you file on the 1040EZ, the IRS doesn’t allow you to report any dependents. You can, however, claim dependents on the 1040A and 1040 forms—so it’s beneficial to evaluate your eligibility to claim dependents before settling on the 1040EZ form.

Another limitation of the 1040EZ is that it doesn’t allow you to itemize deductions—you can only claim the standard deduction. Itemizing your deductions on Schedule A is only an option when using the longer 1040 form.

So, if you have a number of deductions, you will have to decide whether itemizing or claiming the standard deduction will save you more in tax. TurboTax can help with this.

Lastly, the biggest tax savings of all is oftentimes the result of claiming tax credits, like those for education expenses, for example. However, the only tax credit you can take on the 1040EZ is the earned income tax credit. It is important to understand that a tax credit reduces your tax bill on a dollar-for-dollar basis, whereas a deduction only reduces your taxable income. Given the potential tax savings, your eligibility to claim a tax credit may be reason enough not to use the 1040EZ.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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