If you prepare your own taxes, take care when selecting a tax form. Some forms are simpler than others but choosing a simple form could cause you to lose tax breaks.
- The 1040EZ is the shortest and simplest form. However, using this form won’t permit you to deduct interest you pay on a student loan. You also lose the ability to take a deduction for IRA contributions.
- The 1040A is a bit more complex than the 1040EZ but it permits you to deduct student loan interest and IRA contributions. In addition, you can take the standard deduction every taxpayer is allowed.
To file either the 1040EZ or 1040A, your taxable income must be less than $50,000 and you can’t have any capital gains to report.
- The 1040, the so-called long form, may be appropriate even if your taxable income is under $50,000. You need to use the long form if you want to itemize deductions, for example.
The standard deduction for 2003 is $4,750 ($9,500 on a joint return). If you spent more than that on mortgage interest, state and local taxes, and charitable contributions, you should file a 1040 and itemize deductions.
