Understanding IRS 1040 Tax Forms and Schedules

Taxpayers may not realize that the IRS tries to make its forms simple to use. Tax laws, exemptions and allowances change most every year. To make the process easier, IRS changes their forms or schedules and provides instructions on how to use these forms. Here is some information that will make understanding IRS 1040 tax forms easier to understand.

The simplest form to use for paying or filing taxes is 1040EZ. This is the form that most young people will use. You need to use the 1040EZ if you are single, or married filing jointly, and have no dependents. The other stipulation for using IRS 1040 EZ is that there will be no adjustments made to your adjusted gross income.

Some new changes for 2010 are all unemployment benefits are considered taxable. This means that you must report them. Employees whose company went bankrupt are no longer eligible for the $3,000 IRA deduction. The other change affects anyone who took advantage of the first time home buyer credit. The first repayment is due on your 2010 taxes.

Most taxpayers will file IRS 1040 A. If you are a working parent filing 1040 A will give you a higher EIC benefit. That is because the income eligibility is different between the two forms. Another benefit to the 1040 A is that the adjusted gross income was increased for 2010.

Using the 1040 Standard is simple enough by itself; it is all the schedules that can be difficult to understand. The three schedules that you need to know about are Schedule A, C and D:

  1. 1040 Schedule A is for taxpayers who need to itemize their deductions. This schedule should also be used for ordinary dividend statements; you will need your interest statements from your bank or securities broker.
  2. 1040 Schedule C is for those taxpayers who need to report a profit or loss and are the sole owners of a business.
  3. Schedule D is the form people should use who need to report capital gains or losses.

For more information or instructions on these, or other schedules, check out the IRS website. You can download all the forms and instructions you need for free. You can even file your taxes from the website or use it to check on the status of your refund.

Some confusion exists about the difference between IRS 1040 and 1040A forms. Anyone who makes more than $100,000.00 a year, make over $1,500 in interest payments and has more than the standard income must file tax form 1040.

If you do not want to try to figure it out for yourself, there are many good services that will do your taxes for you. Be sure to find out what they charge and what kind of information they will need from you. Or check online, there are good resources to help with IRS 1040 tax forms.

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