Which income tax form should you use? You must file Form 1040, the long form, if you meet any of these conditions:
- Your income (combined incomes for joint filers) tops $100,000.
- You itemize deductions.
- You have any self-employment income to report.
- You received income from the sale of property.
If you don’t meet any of the above conditions, you can file the simpler Form 1040A, which will save on tax preparation time (or money, if you hire a preparer). You can use Form 1040A even if you have capital gain distributions from mutual funds, as long as you have no other capital gains or losses to report.
The simplest, cheapest tax return form is the one-page Form 1040EZ. To use this form:
- Your filing status can be either single or married filing jointly;
- You (and your spouse, if filing jointly) must be younger than 65, as of January 1, 2005;
- You can not be legally blind;
- You must have no dependents;
- Your interest income must be less than $1,500; and
- Your income, as above, must be less than $100,000.
The catch, though, is that you can’t use any tax breaks on Form 1040EZ, other than the earned income tax credit. If you want to deduct student loan interest, for example, or claim a dependent care tax credit, you’ll have to use Forms 1040 or 1040A.
