What Is a 1040A Tax Form?

Between forms 1040EZ, 1040A and 1040, form 1040EZ is the simplest to fill out. However, filers must meet a number of conditions in order to use it. Form 1040 is the most complex of the three forms but is the best option for taxpayers who wish to reduce tax liability by claiming a large number of deductions and credits. Form 1040A is the middle ground between these two extremes.

Eligibility to file form 1040A

In order to file a form 1040A, a taxpayer's adjusted gross income must not exceed $100,000 and must only come from certain sources. The taxpayer must also not have exercised stock options that trigger liability under the alternative minimum tax (AMT). He must not have claimed an advance on the earned income tax credit or dependent care benefit, and must not owe tax due to having to pay back an educational grant or AMT arrears.

Limitations on claiming deductions and credits

One major disincentive to file with form 1040A as opposed to form 1040 is that taxpayers cannot itemize deductions and can only claim a few "above the line" deductions and credits. The few deductions and credits they can claim include the student loan interest deduction, the earned income tax credit and the child tax credit. Most of the other deductions and credits they can claim with this form arise from health care, education and dependent care.

Form 1040A makes it easy for taxpayers with a relatively simple tax situation to quickly and easily file their taxes. Those who have earned income from sources such as capital gains and investments are better off filing with form 1040, as are those who run a business or are in any situation where itemizing deductions may greatly reduce tax liability. Otherwise, form 1040A is a much more convenient solution.

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