Everything You Need to Know About IRS Form 1040A

President Trump endorsed a new tax plan in December 2017. The new law merged Forms 1040, 1040A, and 1040EZ into a redesigned Form 1040 that all taxpayers can use. For the 2019 taxes that are filed in 2020, you used this new 1040. This means that you will no longer be able to use the 1040A unless you file an income tax return for the 2017 tax year or earlier.

Eligibility Requirements for Form 1040A

Using the Form 1040A depended on your income and your income sources. You had to meet the following requirements:

The taxable income was less than $ 100,000

Your income came only from salaries, interest and dividends, capital gains, taxable grants and subsidies, unemployment benefits, annuities, pensions and IRAs. In case you had other income sources such as self-employment income, you were not entitled to Form 1040A.

Limitations of Form 1040A

Filers using Form 1040A could take certain write-offs, such as IRA contribution, for you of pocket educator expenses, student loan interest rates, and tuition fees. All of this would reduce your taxable income. However, what you could do is to itemize your deductions on Form 1040A. You could only take the standard deduction and those above the line deductions. So if you intended to itemize rather than taking the standard deduction, you needed to use the standard Form 1040.

Form 1040A gives you more tax credits than 1040EZ, but not as much as Form 1040. On 1040A you could claim, if you qualified, credits for child and dependent care expenses, for seniors or people with disabilities, for retirement savings and for education costs. You also could apply for the EITC (Earned Income Tax Credit). The Net Premium Tax Credit, the Additional Child Tax Credit, and the American Opportunity Credit was also available to 1040A users. 

Using Form 1040A

The IRS website provides comprehensive, step-by-step instructions for the filers to complete Form 1040A. This includes information for the 2015, 2016 and 2017 tax years.

As with all 1040 Forms, you start with your personal information and continue with your income, deductions, and credits. If you don't know how to complete Form 1040A, IRS instructions are your best friend. If you're using a tax program or tax accountant, you probably don't need to read these instructions verbatim.

Conclusion

As with all tax forms, the main purpose of the 1040A was to provide precise and complete data and to get the most out of the form. If you claim less credits and deductions, you owe the IRS more - or get less refund - than you should. During your taxable life, you may have started using Form 1040EZ early in your career. Then you may have completed 1040A once you qualify for additional deductions and credits. Finally, when your finances are particularly complicated and / or your wealth increases, you can go to the long-form 1040. This also differs from the 2018 tax year, because there is now only one 1040 for all filers.

Sponsor Ads

• Ad Space Available - Rent it Now!

Report this Page

Created on Aug 31st 2021 14:00. Viewed 101 times.

Share on APSense

Comments