What is the Form 1040-A used for?

Although the Internal Revenue Service might be known for its stern, it does not mean they don't always do their best to make the process of filing tax a very easy one. IRS has consistently come up with different types of personal tax returns in other to make the filing process very easy. Among the different measures is Form 1040-A.

In simple terms, Form 1040-A is a more simplified version of 1040 and 1040EZ form used to file an annual income return tax required by the U.S taxpayers. Once a taxpayer is qualified for a simple tax return like Form 1040-A, the process of filing would be very easy and mistakes on the snarled process would be avoided. The consequence of the snarled process mistake is usually delayed tax refund.

Some of the conditions which applied to the previous Form 1040EZ also applied to this new one. The conditions are highlighted below.

Conditions To Qualify For A 1040-A Form

• A filer must not itemize deductions

• A filer is not expected to have a taxable income more than $100,000.

• During the tax process, a filer must not engage in any incentive stock option (ISO).

• Filer source of income must be within the following: capital gain, tips, wages and salary, interest income, unemployment compensation, taxable social security, taxable scholarship or grant, retirement benefits, and Alaska Permanent Fund Dividend.

Understanding 1040-A Form

Before the adoption of 1040-A, most taxpayers use 1040 to file for their income return tax. Form 1040 is very detailed and offers taxpayers with itemized deduction, complex investment and multiple tax credit exceeding the $100,000 annual income interest of 1040A.  Also, filers are given an opportunity to lower their tax liability. However, because filing for 1040 requires additional paperwork, most people opted for 1040-A.

How 1040- A Form Works

A taxpayer with form 1040-A is given the opportunity to get various tax deduction in order to reduce their taxable income. However, the standard deductions include post-secondary tuition and fees, student loan interest, expenses for class and individual retirement account contributions (IRA). Taxpayers are not eligible for itemized deductions.

Anyone qualified for other sources of income such as mortgage interest or charitable donation and the total amount for itemized deductible exceeds the standard deduction cannot use 1040-A Form.