Tips for Preparing Form 1040EZ

Form 1040EZ

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Form 1040EZ is a tax form published by the Internal Revenue Service. Form 1040EZ can be used by individuals to report their income, and calculate their federal income tax.

Why Use Form 1040-EZ

Many people qualify to use the 1040EZ form. It is easier to fill out and less time-consuming compared to the longer Form 1040A and Form 1040. Form 1040EZ may be the right tax form for a taxpayer who does not have any kids or dependents, does not own a home, or did not attend college during the year.

Who Is Eligible to File the 1040EZ

Individual taxpayers can file the Form 1040EZ if they meet the following conditions:

However, taxpayers might consider using Form 1040A instead. Even though it is slightly longer, a person can report more types of income and more types of deductions and credits on Form 1040A. 

Tips for Preparing a Form 1040EZ

Double check the spelling of your name and your Social Security number (SSN). The IRS might take longer to process your tax return if your name and SSN do not match the records of the Social Security Administration. Longer processing can result in a delayed refund. If you need to change your name on your Social Security card (for example, because you got married or legally changed your name), change your name with the Social Security Administration before filing your tax return with the IRS.

Be Sure You Have All Your W-2 Forms

Each employer for whom you worked during the year should send you a Form W-2 reporting your wage income and tax withholding for the year. You should receive your Forms W-2 by the end of January.

You will need all your W-2 forms before you can file your tax return. That's because we total up all your wage income and all your withholding and report these totals on the tax return. If you haven't received a Form W-2 by mid-February, contact the IRS.

Be Sure You Have All Your 1099-Int Forms

Form 1099-INT is sent out by banks, credit unions, and other financial institutions. It reports the amount of interest income you received or earned during the year. You should receive your Forms 1099-INT by the end of January.

If you don't receive a Form 1099-INT, it may be because you earned less than $10 of interest at that financial institution. Financial institutions are required to send out that form only if a person has earned $10 or more of interest during the year. So if you don't have a Form 1099-INT, you might try looking at your December bank statement find out how much interest you earned during the year.

Look for a Form 1099-G If You Received Unemployment Benefits

State agencies report the amount of unemployment compensation using Form 1099-G. You'll need the amount of the unemployment compensation and federal tax withholding to report on Form 1040EZ. 

State agencies also use Form 1099-G to report state tax refunds paid out. If you filed a Form 1040EZ or 1040A last year, you don't need to worry about this. State tax refunds are taxable only if a person itemized their deductions in the previous year.

Know Your Adjusted Gross Income

This is calculated on line 4 of Form 1040EZ. Adjusted Gross Income (AGI) is a widely used measurement of your income for the year by banks and other financial institutions. AGI is also used to measure how much of a premium assistance tax credit you are eligible for. And IRS uses last year's AGI to verify your identity when electronically filing.

Know Your Standard Deduction and Personal Exemption

On Form 1040EZ, the standard deduction and personal exemption are combined into a single number. For people who are not dependents, these amounts combine to $10,300 for a single person and to $20,600 for a married couple filing jointly for the year 2015. Dependents, by contrast, may have a lower standard deduction amount and are not eligible to claim their personal exemption.

The back of Form 1040EZ (page two of the PDF) has a worksheet for calculating this amount for dependents. The standard deduction and the personal exemption, combined, represent a deduction. This amount of income is not subject to the federal income tax.

Know Your Taxable Income

Taxable income is calculated on line 6 of Form 1040EZ. This figure will be used to look up your federal income tax on the tax tables in the back of the 1040EZ Instruction booklet. The amount of taxable income is less than adjusted gross income because it has been reduced by the standard deduction and personal exemption.

An Easy Way to Calculate the Earned Income Tax Credit

You can use the Earned Income Tax Credit Assistant on the IRS Web site if you are not sure if you qualify. This Web application on the IRS Web can help you determine if you qualify for the earned income credit and how much of an earned income credit you are eligible for.

Nontaxable Combat Pay Election

If you served in the military and received combat pay, your non-taxable combat pay is shown on your W-2, Box 12, code Q. There will be a dollar amount next to the "Q."

You can choose to include your combat pay for Earned Income Credit purposes, or you may choose to leave it out. (Choices like this are called an "election" in tax-jargon, hence this line is called the nontaxable combat pay election.)

The best bet is to calculate your earned income tax credit both ways. First, calculate the credit using only your "earned income" from the worksheet, and then calculate it again using your "earned income" plus your combat pay. Take whichever credit amount is higher.

If you decide to include your combat pay, enter the amount coded as "Q" on your W-2 on Line 8b of Form 1040EZ. You can learn more about the nontaxable combat pay election in chapter 4 of  Publication 596, Earned Income Credit on the IRS Web site.

Be Careful With Direct Deposit

If you are getting a refund, the IRS can directly deposit your refund into your checking or savings account. Receiving a direct deposit is faster than getting a refund check mailed to you since there's no check to get lost or stolen. However, direct deposit comes with one big drawback.

Your bank account information in this section must be absolutely 100% correct. If the information is not accurate, the IRS will send your refund to the wrong bank account. And generally speaking, the IRS will be unable to help you get back your refund money. 

To make sure your direct deposit will arrive safely, get out your checkbook, and look at one of your checks. In the bottom left-hand corner, you will see lots of numbers. The first series of numbers should be a 9-digit bank code. This is called the Routing Transit Number. Next, find your account number on your check.

Triple Check Your Bank Numbers!

Make sure your routing number and bank account number are entered correctly on your Form 1040EZ. The IRS will send the refund to the bank account you indicate. Making a mistake here could cost you your refund. Once the IRS issues a direct deposit, it is often difficult and sometimes even impossible to get that refund back.

In fact, many people have lost their tax refunds forever by making a mistake with incorrect direct deposit information. Please check your direct deposit information at least three times. If you need help with the routing transit number and bank account number, contact your bank for assistance.

It's Your Choice Whether You File on Paper or Electronically

Filing a tax return on paper, and mailing it in, is easy, convenient, and low-cost. The IRS will take a bit longer to process your tax return, however, because they will need to enter your data into their computer system. However, submitting a paper tax return only costs you postage, and so is generally the most cost-effective way for you to file your taxes.

Filing electronically eliminates the data entry work that the IRS has to do, and so the IRS can process your tax return quicker. This means you can get your tax refund sooner and with fewer chances of a delay. In order to e-file your tax return, you'll need to use a software program or file your return through a tax preparer, which could add to the cost of preparing your tax return.

Tips for Mailing Form 1040EZ on Paper

Here are some tips to minimize any IRS processing errors when transcribing your tax return:

  • Download Form 1040EZ. The file is in the Adobe Acrobat PDF format, and you'll be able to type in your information directly on the form. Be sure to save your filled-in PDF file so you don't lose your data.
  • Double check your math.
  • Staple your W-2 form or forms to the front of the tax return.
  • Check your direct deposit information.
  • Sign and date the tax return.
  • Do not cross out any of the perjury statement just above the signature area. This text is called the jurat and states that you are signing the tax return under penalty of perjury. Some taxpayers have attempted to avoid tax fraud charges or perjury charges by crossing this text out, however, tax laws require that tax returns be signed under penalty of perjury (see Internal Revenue Code section 6065).
  • Mail the tax return to the appropriate IRS Service Center. You can find mailing addresses on the IRS Web site on their Where to File Addresses for Form 1040EZ page.

Tips for Electronically Filing Your Form 1040EZ

In order to electronically file (e-file) your tax return, you'll need to use a tax software program or hire a tax preparer. IRS Free File provides free access to Web-based tax preparation software. If you have adjusted gross income of $62,000 or less, you'll be able to prepare and e-file your tax return using one of the software programs that participate in the Free File Alliance. Many states offer free e-filing as well. Check with your state tax agency to see if they provide this service.

After Your File Your 1040EZ

  • Checking on your tax refund: You can check the status of your refund using a Web application on the IRS Web site called Where's My Refund? For e-filed returns, you can check your refund status seven days after you electronically filed the return. If you mailed in your return, you'll need to wait about four to six weeks before you check on the status of your refund.
  • Save a copy of your federal tax return for at least three years: Even after your tax return has been mailed or e-filed, you'll want to keep a copy of your return and related financial documents. Print out an extra copy of your tax return, and keep it, along with all your tax documents and other financial records, for at least three years. If you used a software program to prepare your return, keep a PDF copy of the return. But also keep a paper copy of the return in a separate location. That way, if one copy goes missing, you'll still have the other copy.