What Time Is It?
Yes, it is that time of year again. You know, the time when people begin to break out in hives at the thought of doing their taxes. The time when business owners scramble to find all of their missing receipts. The time when people begin planning how to spend their tax refund check before it is received.
The time when one finally earns an income and is ready to complete their first tax return and is unsure of where to start.
Well, I can attest that knowing which tax form you need to complete can be stressful because there are so many different forms from which to choose. You are not alone, the majority of Americans are not sure which tax form to complete.
Don’t worry, in this blog I will walk you through the most commonly used tax forms and explain who would typically use each form.
Let’s begin…
- Form 1040EZ: This form is probably the most commonly used tax form. It is typically used by taxpayers filing as single, married, jointly and/or have no dependents. The 1040EZ is less complex than the others. It also generally takes less time to fill out and process. Form 1040EZ is primarily used by people who are employees, students, or people who are unemployed. If you own your own business, you would most likely not use this form. It is commonly used by taxpayers who meet the following criteria:
*Taxable income is less than $100,000
*Has income from only the following sources: wages, salaries, tips, unemployment compensation, taxable scholarship or fellowship grants, Alaska Permanent Funds dividends
*Claims only the following credits:
-Earned Income Tax Credit (EITC)
-Federal telephone excise tax credit.
*Under the age of 65
*Are not legally blind
*Is not a debtor in a Chapter 11 bankruptcy case (that was filed after October 16, 2005)
2. Form 1040: Form 1040 is the standard federal income tax form used to report an individual’s gross income (e.g., money, goods, property, and services). It is also known as “the long form” because it is more extensive. Form 1040 is unique because it allows taxpayers to claim numerous expenses and tax credits, itemize deductions, and adjustable income. While the 1040 may take longer to complete, it benefits taxpayers by giving them more opportunities to lower their tax bills.If you are self employed (earned a 1099), own a home, or sold stock and bonds you would typically use this form.
You must file Form 1040 if any of the following apply to you:
*You have taxable income of $100,000 or more
*You have self-employment income of $400 or more
*You have itemized deductions (e.g., mortgage, interest, or charity)
*You earn income from a business, S-corporation, partnership, trust, rental, or farm
*You have sold property, stocks, bonds, or mutual funds
*You are claiming income adjustments (for tuition, educator expenses, moving expenses, or health savings accounts)
*You earn foreign wages, paid foreign taxes, or are claiming tax treaty benefits
3. Form 1040NR: Form 1040NR is also known as U.S. Nonresident Alien Income Tax Return. This tax form is like form 1040 used by US citizens. A taxpayer would typically use this form if they are a nonresident alien during the past tax year that engaged in business in the US. You are required to file even if you didn’t earn an income from the business. You must also use this form if you meet one of the following requirements:
* A nonresident alien who did not engage in US business, but received income from US sources that are reportable on Schedule NEC (Not Effectively Connected).
*If you are the representative for a deceased person who would have been required to file tax form 1040NR.
*You represent a trust or estate that has to file this tax form.
Well, that about sums it up. Congratulations you have graduated from tax class 101. If you have any additional tax questions, see your local tax specialist, A certified public accountant (CPA), or The United Way of Tampa Bay offers a free tax preparation program called the V.I.T.A. TAX PROGRAM where you can either meet, in person, with an I.R.S. certified tax volunteer or complete your taxes online for FREE! Visit their website HERE to learn more information and to find a location close to you.
Chantel Richard, is a Florida native, born and raised in Kissimmee FL. Anyone who knows Chantel would say she is very bubbly, outgoing, intelligent, and down-to-earth. In her spare time, Chantel loves to fish, travel, encourage and inspire others, and volunteer. Chantel graduated from St. University with a masters in accounting. She worked in accounting for 8 years, prior to her transitioning to becoming Florida real estate agent.
