What It Was, Replacement by Form 1040

What Was Type 1040EZ: Revenue Tax Return for Single and Joint Filers With No Dependents?

IRS Type 1040EZ: Revenue Tax Return for Single and Joint Filers with No Dependents was the shortened model of the Inside Income Service (IRS) Type 1040. This kind was for taxpayers with fundamental tax conditions and supplied a quick and simple option to file earnings taxes. 

The shape was discontinued as of the 2018 tax 12 months in favor of the redesigned Type 1040.

Eligibility for Type 1040EZ

To make use of the shape, a taxpayer needed to have taxable earnings of lower than $100,000, lower than $1,500 of curiosity earnings, and declare no dependents. Different necessities for submitting the Type 1040EZ included:

• The taxpayer and their partner, if married submitting collectively, needed to be underneath age 65 on the finish of the related submitting interval.
• They may not be blind as of the top of the related submitting interval.
• The filer may take no deductions for pupil mortgage curiosity, educator bills, tuition and charges, or itemized deductions.
• If the filer acquired curiosity earnings, they may not have been required to file Schedule B, didn’t have quantities in packing containers 11, 12, or 13 of Type 1099-INT or packing containers 6 and 10 of Type 1099-OID, and didn’t earn any curiosity as a nominee.
• Tax credit for retirement financial savings, well being protection, and training weren’t allowed.
• The tax filer couldn’t have acquired any advance earned earnings credit score (EIC), though they might have been allowed to say the EIC when submitting Type 1040EZ.
• The filer couldn’t be a debtor in any Chapter 11 chapter case that was filed after October 16, 2005.
• The filer, their partner, if married submitting collectively, or any of their dependents for which they claimed the private exemption didn’t obtain any advance funds of the premium tax credit score supplied for well being protection plans bought on the Market.
• The filer doesn’t owe any family worker taxes on wages paid to family staff.

For most people, the 1040EZ was the primary tax kind they ever accomplished. Take into account a typical high-school pupil employed part-time. Offered they met the earnings {qualifications}, the 1040EZ will doubtless be probably the most easy and applicable kind to file. 

Limitations of Type 1040EZ

Type 1040EZ was finally scrapped as a result of limitations of the shape. The IRS opted for the constructing block method of permitting taxpayers to extra simply add allowances or credit as relevant to their return. As well as, Type 1040EZ had a number of different drawbacks.

First, the shape may solely be utilized by these beneath a certain quantity of earnings and varieties of earnings. Anybody who had earnings from sources apart from wages, salaries, suggestions, taxable scholarships, or fellowship grants couldn’t use Type 1040EZ. This precluded any taxpayer who acquired overseas earnings (or filed utilizing a overseas handle) from utilizing the shape. As well as, any taxpayer hoping to say a dependent may additionally not use Type 1040EZ.

Due to the simplistic nature of Type 1040EZ, taxpayers weren’t allowed to itemize their deductions nor had been they in a position to take different varieties of deductions resembling pupil mortgage curiosity deduction or deductions for IRA contributions. The shape additionally failed to permit taxpayers to report their well being protection; those that use Type 1040EZ had been required to individually report their well being protection standing.

Type 1040EZ vs. Type 1040

Type 1040EZ had just a few credit or deductions out there to taxpayers. Filers had been in a position to embody an earned earnings credit score (EIC) and elect nontaxable fight pay.

For many tax years, Type 1040 had 80% extra traces than kind 1040EZ. One vital distinction was that Type 1040 had fields to incorporate details about dependents, whereas 1040EZ didn’t permit people to say dependents. Comparable to the usual kind, the EZ model had sections to document wages, salaries and suggestions, and taxable curiosity underneath $1,500. The filer was additionally in a position to embody unemployment compensation funds.

Type 1040EZ allowed filers to say earnings from wages, suggestions, salaries, taxable grants or scholarships, the Alaska Everlasting Fund, and unemployment compensation. Type 1040, although, had no less than 16 earnings classes.

Classes out there on the usual kind included dividend funds, retirement account distributions, and farm and rental earnings. Type 1040 additionally allowed the entry of Social Safety advantages, alimony, and different types of earnings. This kind additionally had a protracted checklist of deductions, starting from training prices to healthcare financial savings plan contributions.

The Backside Line

The IRS beforehand allowed for taxpayers to pick out a selected Type 1040 to make use of based mostly on the complexity of their tax return. The only kind for probably the most straight-forward returns may use Type 1040EZ. Nonetheless, the shape was discontinued in 2018, and all taxpayers should use Type 1040 as a part of their annual submitting.