Form 1040-A

What Was Form 1040-A: U.S. Individual Tax Return?

Form 1040-An of the Internal Revenue Service (IRS) was a simplified rendition of Form 1040 utilized by U.S. taxpayers to file an annual income tax return. To have been eligible to utilize Form 1040-A, an individual expected to meet certain requirements like not organizing deductions, not claiming a business, and having a taxable income of under $100,000. Unofficially known as the "short form," Form 1040-A was eliminated for the 2018 tax year in favor of the overhauled Form 1040 that appeared that year.

Who Had to File Form 1040-A: U.S. Individual Tax Return?

Most U.S. taxpayers use IRS Form 1040 to file their income tax returns. Form 1040 is a detailed form that offers taxpayers with complex investments, itemized deductions, multiple tax credits, and more than $100,000 in annual income more opportunities to bring down their tax liability. Because additional paperwork is usually required with Form 1040, individuals with simpler tax situations recently had the option to utilize Form 1040-An instead.

Form 1040-A was a simplified rendition of Form 1040. The two-page form allowed taxpayers to report ordinary income, a few deductions, and credits. Individuals who fell under any of the five status options — single, head of household, married filing separately, married filing jointly, or bereaved — could file their tax returns utilizing the 1040-A. However Form 1040-A was available to taxpayers of any age and filing status, not every person qualified to utilize this form.

Tax filers who utilized 1040-A must have earned under $100,000 taxable income and not have practiced any incentive stock options (ISO) during the tax year. The income reported must have been earned as a wage, salary, tip, capital gain, dividend, interest income, unemployment compensation, pension, annuity, taxable Social Security and railroad retirement benefit, taxable scholarship or grant, and Alaska Permanent Fund dividend. Any other form of income, like business income, should have been reported on the more complex Form 1040.

How Did Form 1040-A Work?

Form 1040-An also gave taxpayers the opportunity to claim several tax deductions to reduce their taxable income. Notwithstanding, the main deductions they could claim included student loan interest, post-secondary tuition and fees, classroom expenses, and individual retirement account (IRA) contributions. Taxpayers utilizing Form 1040-A couldn't claim itemized deductions. This limitation meant that assuming an individual qualified for different deductions from sources, for example, charitable donations or mortgage interest, and the total itemized deductible amount was more than the standard deductions, it could not have possibly been advantageous for them to utilize 1040-A.

Form 1040-An also could be utilized to claim tax credits. Tax credits reduce the reality or total tax bill of a taxpayer. The credits that could be claimed utilizing this form were the American Opportunity Tax Credit (AOTC), Earned Income Credit (EITC), child tax and additional child tax credit, child and dependent care credit, credits for the elderly or disabled, and retirement savings contribution credit.

Form 1040-A versus Form 1040-EZ

Another variant of Form 1040 was Form 1040-EZ, which was even simpler and easier to finish up than Form 1040-An and was also eliminated starting with the 2018 tax filing. However, with Form 1040-EZ, the individual had to file as either a single taxpayer or as married filing jointly; they couldn't claim deductions and could claim the EIC.

Although Form 1040-A was somewhat more complex than Form 1040-EZ, it was still relatively simple compared to 1040. When their financial situation became complicated with dependents, special deductions, and credits —, for example, those associated with post-secondary education tuition — most taxpayers expected to switch from filing with the 1040-EZ to the 1040-A.

The overhauled Form 1040 that appeared with the 2018 tax year is intended to be a lot simpler to use than its ancestor. Hence, the IRS eliminated both Form 1040-An and Form 1040-EZ.

Features

• The IRS eliminated Form 1040-A for the 2018 tax year in favor of the overhauled Form 1040.
• Another variant of Form 1040 was Form 1040-EZ, which was even simpler than Form 1040-An and was also eliminated starting with the 2018 tax filing.
• Form 1040-A was a simplified variant of Form 1040 utilized for filing individual income tax.
• Filers utilizing 1040-A were required to have under $100,000 in taxable income and not have practiced any incentive stock options during the year.