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While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Filling out a tax form is about as much fun as owing taxes to Uncle Sam. The complexity of the task intensifies as your tax life becomes more complicated. But choose carefully. There are three personal income tax forms — , A and EZ — with each designed to get the appropriate amount of your money to the IRS.
The EZ is the shortest and simplest form, Form A is a bit more complex and the long Form is the most detailed and potentially difficult. But even if your tax life is simple and straightforward, it might be worthwhile to investigate the other two forms. Generally, the longer the form, the more opportunities for tax breaks. If you previously filed Form EZ, but bought health insurance through an Affordable Care Act state or federal exchange, known as the marketplace, you can no longer file this simplest form.
When individuals purchase a policy through an exchange, they have an option to receive advance payment of the premium tax credit. This tax credit helps cover some of the insurance costs. The advance credit amount, however, must be accounted for when the policy recipient files his or her tax return. If the advance premium amount was too small, the taxpayer will get the extra.
However, if too large of an advance premium credit was paid, the taxpayer must make up the difference, either by paying any tax due or by having the amount taken from an expected refund. The IRS website provides filers with detailed, step-by-step instructions on how to fill out Form A. This includes directions for tax years , and As with all the Forms, you start with your personal information, then move on to your income, deductions and credits. Your filing software should do the heavy lifting for you.
As with any tax form, the twin goals with A were to provide accurate, complete information and to get the most out of what that form could do for you. Unofficially known as the "short form," Form A was eliminated for the tax year in favor of the redesigned Form that debuted that year.
Most U. Because additional paperwork is usually required with Form , individuals with simpler tax situations previously had the option to use Form A instead. Form A was a simplified version of Form The two-page form allowed taxpayers to report ordinary income, some deductions, and credits.
Individuals who fell under any of the five status options—single, head of household, married filing separately, married filing jointly, or widowed—could file their tax returns using the A. Though Form A was available to taxpayers of any age and filing status, not everyone qualified to use this form. The income reported must have been earned as a wage, salary, tip, capital gain, dividend, interest income, unemployment compensation, pension, annuity, taxable Social Security and railroad retirement benefit, taxable scholarship or grant, and Alaska Permanent Fund dividend.
Any other form of income, such as business income, needed to be reported on the more complex Form Form A also gave taxpayers the opportunity to claim several tax deductions to reduce their taxable income. However, the only deductions they could claim included student loan interest, post-secondary tuition and fees, classroom expenses, and individual retirement account IRA contributions. Taxpayers using Form A could not claim itemized deductions.
This limitation meant that if an individual qualified for other deductions from sources such as charitable donations or mortgage interest , and the total itemized deductible amount was more than the standard deductions, it would not have been advantageous for them to use A. Form A also could be used to claim tax credits. Tax credits reduce the bottom line or total tax bill of a taxpayer.
The credits that could be claimed using this form were the American Opportunity Tax Credit AOTC , Earned Income Credit EITC , child tax and additional child tax credit , child and dependent care credit , credits for the elderly or disabled, and retirement savings contribution credit. Another variant of Form was Form EZ , which was even simpler and easier to fill out than Form A and was also eliminated starting with the tax filing.
But with Form EZ, the individual had to file as either a single taxpayer or as married filing jointly; they could not claim deductions and could only claim the EIC. Although Form A was slightly more complex than Form EZ, it was still relatively simple compared to After reporting your income, the A form allows you to claim certain adjustments to arrive at your adjusted gross income.
These include deductions for educator expenses, IRA contributions, student loan interest and tuition payments. The second page of Form A allows you to subtract a standard deduction and your exemption deductions for tax years prior to from your adjusted gross income to arrive at your taxable income.
You then need to determine the amount of tax you owe by finding the appropriate range for your taxable income and filing status in the tax tables in the instructions. Once you calculate your tax, Form A allows you to claim a limited number of tax credits such as for child and dependent care expenses, child tax credit, the credit for the elderly or disabled and education tax credits.
Your total credits reduce your tax bill on a dollar-for-dollar basis. After reducing your tax by the credits, you reduce it again by the amount of your tax payments and withholding. The filing status and exemptions section of Form A is similar to the corresponding section on Form Due to the limited types of income you can receive and the limited adjustments to income you can make on Form A, the income and adjusted gross income sections of Form A are much shorter.
One of the most significant differences between the two forms is that you can itemize deductions on Form but not on Form A.
Remember, with TurboTax , we'll ask you simple questions about your life and help you fill out all the right tax forms. Whether you have a simple or complex tax situation, we've got you covered. Feel confident doing your own taxes.
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