TWO-MINUET Tidbit: Which Tax Form Should You File?

Which form should you use to file your federal income taxes? These days, most people sfotware and e-file their tax forms or have a tax preparer. It’s easy, because tax software or your preparer selects the right form for you. If you file on paper, you’ll need to pick the right form to use.

Before you decide, check out IRS Free File on IRS.gov. It has free tax software or a Fillable Forms option that allows you to fill in your tax forms using a computer. You can e-file the completed forms for free!

If you still prefer paper and pen, here are some tips on how to choose the best form for your situation.

You can generally use the 1040EZ if:

  1. Your taxable income is below $100,000
  2. Your filing status is single or married filing jointly;
  3. You are not claiming any dependents; and
  4. Your interest income is $1,500 or less.

The 1040A may be best for you if:

  1. Your taxable income is below $100,000
  2. You have capital gain distributions;
  3. You claim certain tax credits; and
  4. You claim adjustments to income for IRA contributions and student loan interest.

The reasons you must use Form 1040 include:

  1. Your taxable income is $100,000 or more;
  2. You claim itemized deductions;
  3. You are reporting self-employment income; or
  4. You are reporting income from sale of a property.

The Schedule C-EZ may be best for if  you have a profit from your business and:

  1. Your expenses are not greater than $5,000
  2. You have no employees,
  3. You have no inventory, and
  4.  You are not using depreciation or deducting the cost of your home you can use Schedule C-EZ.

The Schedule C is a must for you if you have a profit from your business and:

  1. Cannot use schedule C-EZ
  2. You do not have any partners or investors
  3. You business is not incorporated
  4. Watch who should file this form here

Form 1065 is the form your tax preparer would use if:

  1. You have one or more partners
  2. Your business was started in the United States
  3. Part of a joint venture, pool, or syndicate

Form 1120 or 1120-S will used by your tax preparer for you if:

  1. You have one or more partners
  2.  You are domestic corporation
  3. Elected to be treated as an taxable corporation

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.

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