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The 1040EZ: box-by-box

You've gathered all of your tax materials and find you can file a Form 1040EZ. You're one of the lucky ones. The EZ is the simplest of the three individual tax return forms.

We'll take you through the 1040EZ, box-by-box, line-by-line. It shouldn't take too long, so let's get right to it!

If you received a tax package from the Internal Revenue Service with a peel-off label, make sure the information is correct. If it is, stick it here. If there are mistakes, you can correct them directly on the label. Just make sure any changes that you write in are easy to read.

If you didn't receive a tax package, fill in the lines above, again legibly. Joint return filers remember to include spouse info, too. Then fill in your home address, including your ZIP code.

You must enter your Social Security number in the boxes provided in the upper right hand corner of the form next to the label information. If you're married, whether you're filing jointly or separately, you must enter your spouse's Social Security number underneath yours. Make sure that the names and numbers you put in here are identical to the data on your corresponding Social Security cards. These numbers are a must. The IRS will not process a return without them, meaning you could miss out on a refund or even end up paying a penalty.

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Next comes a question about giving $3 to the Presidential Election Campaign Fund. You (and your spouse) should check off either "Yes" or "No." Don't be worried about your reply. It won't affect your tax bill in any way.

If you've used other versions of the 1040 tax return in the past, you're probably thinking something is missing. But don't be concerned that there is no filing status section on the EZ. Since this form is restricted to single filers or married couples who have no dependents and want to file jointly, there's no need to waste form space (or your time) making you specify your status. The IRS will be able to determine that by entries you'll make a little bit later.

Now we get to the real reason for this whole exercise: reporting your income.

Total wages, salaries and tips
For most people, what you enter on line 1 will come from box 1 on the Form W-2 you got from your employer. If you (and your spouse) had more than one job, add up the box 1 amounts on all of your W-2s and put the total here.

You must also include any wages you received as a household employee -- even if you didn't get a W-2 -- in the total on line 1 of Form 1040EZ. If such income is added but not on a W-2, write "HSH" on the line next to where you put in your total earnings. This will let the IRS know why there is a difference in the numbers on your return and your W-2.

The same applies to any taxable fellowship or grant amounts. If this money is not reported on a W-2, add it and write "SCH" and the amount on line 1.

For all monetary entries on your return, the IRS allows you to round off cents to whole dollars. To round off, drop amounts under 50 cents and increase half-dollar and above amounts to the next dollar. If you're rounding off one entry, you must round off all entries.

And don't forget to attach copy B of all your W-2 forms in the space indicated on the return.

Taxable interest
On line 2, you'll enter all the interest you got as long as it comes to $1,500 or less.
Your interest earnings generally are listed in box 1 on 1099-INT forms sent by banks, savings and loans and other similar institutions. Add up the total amount of all your interest income from all your 1099s and report it here.

If you find you got more than $1,500 last year, stop reading now. You can't file the 1040EZ. Neither can you use this form if you received dividend or capital gains distributions, regardless of how small such amounts. In these cases you'll have to use a 1040A or 1040.

Additional income
Next we come to line 3, where you take into account two very different, but common, sources of income:

  • Unemployment compensation: You must pay federal tax on unemployment benefits. The paying agency should have sent you a Form 1099-G showing the amount you received for the year.
  • Alaska Permanent Fund dividends: Since 1982, Alaska residents have received an annual payment from their state as their share of oil sales. This amount is reported here.

If you got either of these payments, put the total on line 3.

Adjusted gross income
Now add lines 1, 2 and 3 and enter the total on line 4. This is your adjusted gross income.

Are you someone else's dependent?
As is usually the case with taxes, even an EZ form isn't completely easy. Line 5 is proof of that. Here you're asked if your parents (or someone else) can claim you as a dependent on their return.

You don't have to actually be claimed on another return. Just the fact that someone could claim you means your answer must be "yes." And once you check that "yes" box, you must fill out the following worksheet, found on the back of the 1040EZ. Your computations here will help you determine the amount to enter on line 5.

If no one can claim you as a dependent, your tax form life got EZ again. In this case, simply enter $7,800 if you are single or $15,600 if you are married. These amounts represent the total of the standard deduction for your filing status ($4,750 for single filers; $9,500 for married couples) and the personal exemption amount of $3,050 per each filer.

Taxable income
Now we find out just how much of your money Uncle Sam can tax. Subtract line 5 from line 4 and enter the amount on line 6. This is your taxable income amount. Negative numbers aren't allowed, so if line 5 is larger than line 4, enter zero on line 6.

Tax withheld
Then find your W-2 again and enter the amount from box 2 on line 7 of the 1040EZ. This is the tax that was withheld from your paycheck throughout the year. If you received a Form 1099-INT, 1099-G or 1099-OID for other earnings, any federal income tax withheld from this money should be in box 4 of the 1099. Add this to your paycheck withholding amount and put the total here.

Earned income credit
If you didn't earn that much, you might be eligible for a special tax break: the earned income credit. This credit could give you a refund even if you don't owe any tax. Check page 15 of the 1040EZ instructions to see if you qualify and, if so, use the worksheet to determine the amount to enter on line 8.

Figuring your earned income credit amount is the most difficult part of Form 1040EZ. Four full pages of the instructions are devoted to it. If you prefer, you can let the IRS do the math and figure your credit. Simply print "EIC" to the left of line 8 and leave the amount section blank.

Total tax credits and payments
Next, add lines 7 and 8. This is how much you've already paid the IRS, either through withholding or the earned income credit, and you enter it on line 10. (If you're letting the IRS figure your EIC, just count what you have on line 7; the agency will amend your return with the credit amount and make the change here.)

Tax due
Now we find out if you owe tax or get money back.

Open the 1040EZ instruction book to page 24, the beginning of the tax tables. Here you'll find income ranges listed horizontally and two columns showing tax due for either single or married filers in each range.

Go to your taxable income amount on line 6 and find the income range into which it falls. Then track your finger to your appropriate filing status column and that's the tax you owe. This amount goes on line 10.

Refund calculations and deposit data
If line 9 is larger than line 10, congratulations! You're getting money back from Uncle Sam. Subtract line 10 from line 9 to find out just how much and enter the amount on line 11a.

If you want your refund directly deposited to a bank account, fill in the nine-digit routing number on line 11b. Check the tax form instruction book (page 19) for details. If that doesn't help, call your financial institution for what to enter here.

You also have to let the IRS know whether it's your checking or savings account. Check the appropriate box on line 11c.

And don't forget line 11d. Here's where you put your account number.

The IRS says by entering all these subdivisions of line 11, you should get your direct-deposited refund in about half the time it takes to get a check in the mail. For early filers, that's usually in 10 days to two weeks.

Tax due
But if you had to skip line 11a and its companions, sorry. That means the amount you owe (line 10) is greater than what you paid (line 9) and you'll have to hand over even more money to the IRS. Subtract line 9 from line 10 to find out the exact amount you owe and enter it on line 12. If you pay by check or money order, make it out to the "United States Treasury." Enclose your payment with your return, but don't attach it to the form.

Third party designee
Hang on. We're heading down the home stretch.

We now get to the 1040EZ section that allows you to name someone else to handle any questions about your return.

1040EZ sign the return

Basically, by checking the "yes" box, you allow the IRS to contact your tax pro, your mom, your cousin the CPA or anyone else you want to solve problems related to your return. You are not authorizing your appointed representative to receive your refund check. Neither can he or she bind you to anything regarding your tax return.

Basically, the person you pick is allowed to assist the IRS in answering any questions about your return that might slow its processing. Details on naming a designated tax representative can be found on pages 20-21 of the form's instructions.

Now sign your name, write in the date and enter your occupation. Get your spouse to do the same if you're filing a joint return. Since you've read this far, we figure you probably didn't pay a pro to fill out this form. But if you did, that person needs to complete the box just below your signature.

Then pop the form in the mail. Mission complete!

Michele Erbrick assisted with this report.

-- Updated: Feb. 16, 2004


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See Also
1040 box-by-box
1040A box-by-box
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