Difference between 1040a and 1040 Tax Forms

Tax season can bring some confusion with it.  It can be difficult to make sense of all of the tax forms arriving in your mailbox.  You might not even be able to decide which tax form to use.  Only certain people that had income under $100,000, cannot claim any dependents or adjustments and who are also filing as Single or Married Filing Jointly can use the 1040EZ form.  Once you know you’ve moved past the 1040EZ you then must decide between the 1040 and the 1040A forms.  There are a few differences between the 1040 and the 1040A tax forms.  If you wish to itemize your deductions using a Schedule A then you cannot file using the 1040A form.  Your taxable income (line 27) has to be lower than $100,000 in order to use a 1040A.  There are also certain credits and adjustments on the 1040 form that are not available when using a 1040A. 

To file your taxes using a 1040A your income must be only from the following sources:  wages/salary/tips/interest/ordinary dividends/capital gains/taxable scholarship/fellowship/pensions/annuities/IRAs/unemployment compensation/taxable social security/railroad retirement benefits or Alaska Permanent Fund dividends.  Any adjustments to your income must be education-related such as student loan interest or related to an IRA.  The only tax credits you can take using the 1040A are credits for:  children/dependents, education, elderly/disabled, retirement, earned income or making work pay credit.  You also cannot file a 1040A form if you have any alternative minimum tax adjustments on stock acquired through an incentive stock option. 

If you only have W-2s to file with then a 1040A is most likely okay to use.  If you have a 1099-Misc form reporting non-employee compensation you will need to use the 1040.  If you have a lot of deductions and/or credits that don’t appear on the 1040A then you will have to file a 1040 instead.  For example you cannot take the Adoption Tax Credit, the First-time Homebuyer Credit, credit for federal tax on fuels, the Health Coverage Tax Credit or the Refundable Credit for prior year minimum tax on the 1040A.  If you wish to take any of these credits you will have to use a 1040 form. 

A basic rule of thumb to use when deciding whether to use the 1040 or the 1040A tax form is that if you have a more complicated return you will most likely need to use the 1040.  The 1040 offers a larger spectrum of adjustments and credits.  You can also itemize deductions with a 1040 and report non-employee income.  If your income was higher than $100,000 then you will definitely need to file using the 1040 tax form.  If you’re not sure which form to use then opt for the 1040 which includes any adjustment, type of income or credit you may have.