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Tax Forms File

If there ever was such thing as a Federal Paper Reduction Act, and there was, nobody bothered to tell the IRS, they have forms for everything. In fact, they frequently seem to have at least ten separate and distinct forms for everything.

If your total income is under $100,000, your interest income is under $1,500, you and your spouse are under 65 and your only income is from wages, interest, unemployment compensation, and Alaska Permanent Fund dividends you can use the tax form for dummies, aka 1040EZ if you don't have any income adjustments and are claiming only standard deduction.

To put it more formally, to use the simplest of all income tax filing form you and your spouse must be under 65 years old, filing singly or, if married jointly, not have any adjustments to income, claim only the standard deduction and not claim any tax credits except for an Earned Income Credit.

Since life isn't that simple for most folks, they resort to using old reliable, Form 1040A, also known as the "short form." This form allows you to claim the most common adjustments to income. Anyone of any age or filing status can use this form but only if they have total income under $100,000, have income derived from wages, interest, dividends, capital gain distributions, IRA or pension distributions, unemployment compensation, or Social Security benefits.

Qualifying to use Form 1040A entitles you to claim the following income adjustments: penalty for early withdrawal of savings, IRA contributions, student loan interest, and jury duty pay given to your employer; as wells as the following tax credits: Child and dependent care credit, Credit for the elderly and disabled, Education credits, Retirement savings contributions credit, Child tax credit, and Earned income credit.

The catch is that you are not allowed to use Form 1040A if you want to itemize your deductions. To do that, you must use Form 1040, which can be used for just about anything but reporting the offshore and gray market money you don't want the IRS to know about in the first place.

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