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Filing your return: Choosing the correct form
 Once
you determine that, yes, you've got to file a tax return this year.
The next step is figuring out which form is right
for you.
The three individual tax returns are:
Form 1040EZ
If your tax life isn't very complicated, then you'll probably
want to file this simplest of individual forms. But the tradeoff
in ease is a limit on how you can reduce your taxes.
Use of the one-page 1040EZ is restricted to taxpayers
who earn below a certain amount and who don't have much interest
income. You can't itemize deductions. You can take advantage of
only one tax credit: the earned income credit.
And only single or married-filing-jointly taxpayers
can file an EZ.
Form 1040A
If you file the 1040A form, your taxes are a bit more detailed,
but you have more chances to reduce your taxes.
You still will face income restrictions and you still
won't be allowed to itemize deductions. But on the 1040A you can
subtract contributions to an individual retirement account and interest
paid on student loans.
You also get more tax credit options with the 1040A.
In addition to the earned income credit, you might be eligible for
various child and dependent care, adoption and education credits.
Form 1040
This is the most complicated individual tax return, but it also
offers you the most chances to reduce your taxes.
In addition to subtracting contributions to your IRA
and student loan interest on Form 1040, you get to deduct alimony
paid, contributions to medical savings accounts and moving expenses.
If you're self-employed, you also can subtract from your total income
part of any self-employment taxes and health insurance you paid.
The 1040 also is the only filing method that allows
you to itemize deductions in order to reach a lower taxable income
amount. And you can take some tax credits that are not available
on the other two forms.
You must file the long 1040 if you have certain types
of income, such as capital gains or self-employment earnings, or
if you have household help and pay employment taxes for those folks.
Don't necessarily take the IRS' word on forms
Generally, you receive tax forms from the IRS based on the return
you filed the previous year. But just because you got them doesn't
mean you have to use them to file your taxes.
Be sure to review your tax situation and file the
forms that are best suited to your current circumstances. Forms
are available at most post offices and libraries or can be downloaded
from the IRS Web
site.
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