If you had a simple tax return in the past, you probably used the Internal Revenue Service (IRS) Form 1040 EZ. This form was made for people with basic tax situations. However, the 1040 EZ Form was discontinued after the 2017 tax year, and Form 1040 and Form 1040-SR took their place.
Form 1040EZ was perfect for those under 65 with no dependents and an income below $100,000 per year. It was much shorter than the standard Form 1040, with fewer deductions and credits, making it quicker and easier to complete.
Although you can’t use Form 1040EZ for current tax filings, you can still use it for 2017 or earlier if you qualify. This change was part of the IRS’s efforts to make the tax filing process simpler and more inclusive for everyone.
In this blog, we will explore the purpose of the 1040 EZ Form, who was eligible to use it, where can I get a 1040EZ form, and how to fill it out. We’ll also discuss the benefits of this simplified tax form and how it helped many taxpayers streamline their tax filing process.
What is a 1040EZ Form?
The 1040 EZ form was a simplified tax form for people with basic tax situations. You could use it if your 1040EZ filing status was single or married filing jointly, you had taxable income of less than $100,000 with less than $1,500 of interest income, and you claimed no dependents. This form makes it quicker and easier to report taxes. However, after 2017, Form 1040EZ was discontinued.
What is IRS Form 1040?
IRS Form 1040 is the standard form used to file your annual federal income tax return. It replaced IRS Form 1040 EZ starting with the 2018 tax year. Form 1040 has sections for reporting your income, tax deductions, and tax credits, which determine your tax bill and whether you owe money or can expect a refund.
If you’re wondering, where can I get a 1040EZ form? You can still find the 1040EZ online on the IRS website for tax years 2017 and earlier. For current filings, you’ll need to use the redesigned Form 1040.
If you need more help understanding, Hopkins CPA Firm is just a consultation away. We also assist taxpayers in dealing with complicated tax issues by providing tax relief options like an offer in compromise with IRS, innocent spouse relief IRS, and penalty abatement IRS.
Eligibility for Form 1040EZ
The 1040 EZ form was designed for taxpayers with simple tax situations. Here are the requirements you need to meet to use this form:
Income Requirements
- Your taxable income had to be less than $100,000.
- You could have no more than $1,500 in interest income.
- You couldn’t claim any dependents.
Age and Health Conditions
- You and your spouse, if filing jointly, had to be under 65 at the end of the tax year.
- Neither of you could be legally blind.
Deductions and Credits
- You couldn’t claim deductions for student loan interest, educator expenses, tuition and fees, or any itemized deductions.
- If you received interest income, you wouldn’t be required to file Schedule B or have specific entries on Form 1099-INT or Form 1099-OID.
- You couldn’t claim tax credits for retirement savings, health coverage, or education expenses.
Special Conditions
- You couldn’t have received any advance earned income credit (EIC) payments, although you could claim the EIC when filing.
- You couldn’t be involved in a Chapter 11 bankruptcy case filed after October 16, 2005.
- If you or your spouse, or any of your dependents, have filed jointly, you or you couldn’t have received advance payments of the premium tax credit for health coverage through the Marketplace.
- You couldn’t owe any household employee taxes on wages paid to household employees.
- These criteria ensured that only taxpayers with straightforward financial situations used the 1040 EZ tax form, simplifying the filing process for those years.
These criteria ensured that only taxpayers with straightforward financial situations used the 1040 EZ tax form, simplifying the filing process for those years.
Benefits of Using Form 1040EZ
Form 1040EZ was designed for taxpayers with simple tax situations, and it offered several benefits:
- Simplicity: The form was straightforward to fill out, with fewer sections and less information required compared to other tax forms. This made the filing process quicker and less confusing.
- Time-Saving: Completing the 1040 EZ Form took less time than other forms due to its simplicity. This was particularly beneficial for individuals with uncomplicated tax situations.
- Fewer Calculations: With fewer income sources and deductions to report, the calculations required were minimal. This reduced the chances of errors and made it easier to ensure accuracy.
- Easy Eligibility Determination: The eligibility criteria were clear and easy to understand. If you met the income, age, and other requirements, you could use the form without needing to consult additional tax resources.
- Lower Risk of Audit: Simpler forms with straightforward income reporting had a lower risk of triggering an IRS audit compared to more complex tax returns with multiple deductions and credits.
- Efficient Refund Process: For those eligible for a tax refund, the straightforward nature of Form 1040EZ often meant quicker processing by the IRS, leading to faster receipt of refunds.
- Cost-Effective: If you were preparing your taxes yourself, using Form 1040EZ could save you money on tax preparation fees, as the form was designed for simplicity and didn’t require extensive tax knowledge.
Step-by-Step Guide to Filing Form 1040EZ
While Form 1040EZ is no longer in use, here’s a breakdown of its sections for tax years prior to 2018. This guide will help you understand the form’s components and how they were used.
Step 1: Fill Out the Personal Information
At the top of 1040 EZ form, you were required to provide your personal information, including your first and last name, address, Social Security number, and filing status. This section also included checkboxes for the Presidential Election Campaign.
Step 2: Report Your Income
Next, you’ll report your income. Form 1040EZ simplifies this by only allowing specific types of income:
- Wages, salaries, and tips: Make sure these amounts match what’s shown in box 1 of your Form(s) W-2.
- Taxable interest: Only include this if it’s $1,500 or less.
- Unemployment compensation and Alaska Permanent Fund dividends: Include these if applicable.
Add these amounts together to get your total income. This section captures the essential details of your earnings.
Step 3: Calculate Your Adjusted Gross Income (AGI)
To determine your AGI, you simply add up your sources of income. If you could be claimed as a dependent, you needed to check the appropriate box and fill out the worksheet on the back of the 1040 EZ tax form.
Step 4: Determine Your Taxable Income
To find your taxable income, subtract any deductions or exemptions you’re eligible for from your adjusted gross income. This step helps pinpoint the amount of your income that will be taxed. It’s straightforward, but it’s important to ensure accuracy.
Step 5: List Payments, Credits, and Taxes
In this section, you listed any tax payments you had already made through employer withholding or estimated tax payments. Your employer would issue a Form W-2 showing the total amount of federal tax withheld from your paycheck.
If you are eligible for the Earned Income Tax Credit (EITC), you can claim it here. These were the only two credits you could claim on Form 1040EZ. You then totaled all your payments and credits before calculating the tax owed based on your taxable income, using the tax tables provided in the instructions.
Step 6: Calculate Refunds and Amounts Due
If your total tax payments and credits were more than the tax calculated on your income, you were entitled to a refund. You could enter your bank information to have your refund deposited directly into your account. If you had underpaid, you needed to make a payment for the remaining balance.
Step 7: Sign Your Return
A tax return is not valid without signatures. It was crucial to sign your Form 1040EZ in the last section. If you were 1040EZ filing jointly, your spouse also needed to sign. For electronic filings, you would sign your return electronically.
Limitations of Form 1040EZ
While Form 1040EZ was designed for simplicity, it had several limitations that ultimately led to its discontinuation. Here are some key drawbacks:
- Income Restrictions: IRS Form 1040 EZ was only available to taxpayers with income from wages, salaries, tips, taxable scholarships, or fellowship grants. If you had income from investments, rental properties, or foreign sources, you couldn’t use this form.
- No Itemized Deductions: You couldn’t itemize deductions on Form 1040EZ. This meant missing out on deductions for mortgage interest, charitable contributions, or medical expenses, which could significantly reduce your taxable income.
- Limited Credits and Deductions: The form didn’t allow for many deductions or credits. For instance, you couldn’t deduct student loan interest or contributions to an IRA, limiting potential tax savings.
- No Dependents: If you needed to claim dependents, 1040 EZ Form wasn’t an option. This made it unsuitable for families and individuals with dependents.
- Health Coverage Reporting: Form 1040EZ didn’t include a section for health coverage reporting, which was required for some tax years. Users had to report their health coverage status separately, adding an extra step.
- Age and Blindness Restrictions: The form was only for taxpayers and their spouses who were under 65 and not legally blind at the end of the tax year. This excluded many individuals.
These limitations made Form 1040EZ less versatile compared to other forms, like the standard Form 1040.
As a result, the IRS eventually replaced it with a more flexible approach that allows taxpayers to add allowances and credits as needed. This simplified the tax filing process for more situations, including the availability of options like filing the 1040EZ online.
Bottom Line
In this blog, we discussed the ins and outs of IRS Form 1040 EZ, a simplified version of the standard tax form designed for single and joint filers with basic tax needs. This form made it easy to file taxes quickly and efficiently but was discontinued after President Trump’s 2017 tax plan. Now, when you file your taxes for 2023 or 2024, you’ll use the newly redesigned Form 1040.
The 1040EZ filing taxes can be straightforward if you understand the basics. Educate yourself on whether to take the standard deduction or itemize your deductions. Doing a bit of math can show you which option saves you more money.
If you need any assistance or guidance with the new Form 1040, Hopkins CPA Firm, one of the top CPA firms in Texas, is just a consultation away.
Whether you’re looking for expertise from Austin CPA firm or need help anywhere else in the nation, we’re here to make your tax filing process as smooth as possible.
