What is 1040a and do we still need to use it? The 2017 Tax Cuts and Jobs Act streamlined how we pay our taxes, and the IRS revised tax form 1040 to accommodate most tax information we need to provide. Keep reading to find out more.
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In this article:
- What Was 1040a? How This Tax Form Used to Work Before 2018
- Income Allowed on IRS Form 1040a
- Reporting Tax and Tax Credit on Form 1040a
- IRS Form 1040a Instructions
- When to File Forms 8917 and 1040a
- Why Did the IRS Change Form 1040?
- How Do These Changes Impact Taxpayers?
- How Do I Know What Schedules to File with My Form 1040?
- Summary of Tax Reform Changes That May Reflect in Tax Form 1040
- Where Can I Find Out More Information About Changes in Our Taxes and Tax Returns?
What Is 1040a? | How You Should Be Filing Your Returns Now
What Was 1040a? How This Tax Form Used to Work Before 2018
When you are filing a tax return, you only have three forms to choose from: IRS Form 1040a instructions, 1040EZ, or 1040. Different factors will determine which one is for you.
So, keep reading to know when to use IRS Form 1040a and how to file it.
Previous IRS Form 1040a Instructions | Filing Eligibility
Income Allowed on IRS Form 1040a
The Internal Revenue Service (IRS) makes filing taxes every year more convenient with their tax forms, and one of these is IRS Tax Form 1040a. This one is not as complex as 1040, but might be easier than Form 1040EZ.
Form 1040 and Form 1040a are quite similar in terms of filing status and exemptions section. But, IRS Form 1040a instructions can be quicker to fill out than Form 1040.
The income and adjusted gross income sections are shorter because of the limited adjustments to your income and limited income types you can receive. Also, you may not itemize deductions on Form 1040a.
If you want to do it, you will have to use Form 1040. Check the 1040 tax table to determine the amount of tax you owe before other allowed deductions.
Reporting Tax and Tax Credit on Form 1040a
The 1040a instructions tell you if you are eligible to file using this form or if you need to file Form 1040, including IRS Tax Forms 1040 Schedule A and Schedule C. A part of these instructions include the types of income you can file on Form 1040a:
- Dividend and interest income
- IRA distributions
- Annuity distributions
- Pension distributions
- Capital gains
- Unemployment compensation
- Social Security benefits
- Alaska Permanent Fund dividends
If you have other types of income such as from your own business, you must file Form 1040 and follow the IRS Form 1040 instructions. Tax credits can help reduce your tax.
If you’re using IRS Form 1040a, you can claim dependent care and child tax credit, education tax credit, and credit for the disabled or elderly. You also calculate your tax using the IRS Form 1040a tax table.
IRS Form 1040a Instructions
— IRS (@IRStaxpros) February 14, 2018
As with all IRS tax forms, IRS Form 1040a comes with instructions. It also has several tax tables to help you determine if you are eligible to use Form 1040a instead of Form 1040.
The directions also include what to do if you cannot file on time. You can request an extension, but you still must pay your tax due promptly or face interests and penalties.
Additionally, you cannot file Form 1040a if you need to claim the following:
- Adoption benefits
- Employer contributions to an Archer MSA
- Employer contributions to health savings account if you are required to file IRS Form 8889
- Uncollected Medicare, Social Security, or RRTA tax
- Reportable winnings on Form W-2G
- Bond tax credit
- Mortgage interest, a refund of overpaid interest, mortgage insurance premiums or points, and all on Form 1098
- Contributions of boats, motor vehicles, and airplanes as reported on Form 1098-C
- Home mortgage payments
- Broker and barter trade transactions
- Most canceled debt
- Any income reported in boxes 2b, 2cm, or 2d on IRS Form 1099-DIV
- Non-dividend distributions if you are required to report the distributions as capital gains
- Foreign taxes paid
- Investment expenses
- Any amount reported in boxes 5, 6, 7, or 9 on Form 1099-G
- Early withdrawal penalty reported on Form 1099-INT
- Investment expenses or foreign tax paid
- Specified private activity bond interest
- Payment card and any third-party network transactions as reported on Form 1099-K
- Any long-term care or accelerated death benefits as reported on Form 1099-LTC
- Any miscellaneous income reported on Form 1099-Misc
- Early withdrawal penalty reported on Form 1099-OID
- Market discount reported on Form 1099-OID
- Investment expenses reported on Form 1099-OID
- Any amount reported on Form 1099-PATR boxes 1, 2, 3, 5, 6, 7, 8, 9, or 10
- Qualified education program payments as reported on Form 1099-Q
- Any distributions from ABLE accounts as reported on Form 1099-QA
- Any gross proceeds from real estate transactions and the buyer’s part of the real estate tax as reported on Form 1099-S
- HSA and MSA distributions reported on Form 1099-SA
You are not eligible to file IRS Form 1040a if you are a debtor in a bankruptcy case if it was filed after October 16, 2005, or if you need to repay the first-time homebuyer credit. You must also remember that you need to choose your filing status and dependents before you report your income.
Your filing status, such as single or married filing jointly, determines the tax bracket for calculating your income tax.
When to File Forms 8917 and 1040a
If you have tuition and fees deductions, you must file IRS Form 8917. This form is filed in conjunction with IRS Form 1040a or Form 1040.
You must complete Form 1040a before completing Form 8917 as you will need the information from the former to complete the latter. Once you have completed it and found that you are able to file this form, you will need to enter the number on Form 8917 Line 6 on Form 1040a Line 19.
As a taxpayer, it is your responsibility to fill out the correct form. This short guide on IRS Form 1040a instructions can give you a good head start. You just need to know and understand the allowed income, tax report and credit, the instructions of the form, and the date for filing so you do not get confused.
Why Did the IRS Change Form 1040?
The IRS revised Form 1040 in response to the 2017 Tax Cuts and Jobs Act — the most comprehensive tax reform legislation in 30 years. Basically, the IRS simplified the tax return preparation process by giving taxpayers and preparers only one form to use instead of having to choose between 1040, 1040a, and 1040EZ.
How Do These Changes Impact Taxpayers?
The IRS used a “building block” approach to re-design the tax return preparation process. This means taxpayers will use a single base form, IRS Form 1040, and attach any other forms on top if their financial situation calls for it.
Taxpayers who only rely on a single source of income and have no need to itemize their deductions on their tax returns will only need to file Form 1040 by itself. Other taxpayers who earn additional income and/or pay other forms of taxes will attach additional forms called Schedules to their Form 1040.
The IRS recommends taxpayers e-file their tax returns as tax preparation software will make preparation using the newly revised Form 1040 a seamless experience.
How Do I Know What Schedules to File with My Form 1040?
You will need to attach the following schedules if your situation fits any of the following descriptions:
- Schedule 1 Additional Income and Adjustments to Income: You will need to attach this schedule if you gained income from another source like alimony payments, farm income, taxable income offsets and refunds, real estate rentals, capital gains, etc. Adjustments to income involve some form of credits or deductions, like alimony payments made, moving expenses for army personnel, health savings contributions, student loan interest deductions, etc.
- Schedule 2 Additional Taxes: If you need to pay the alternative minimum tax and excess advance premium tax credit repayments.
- Schedule 3 Nonrefundable Credits: You will have to attach this schedule if you are claiming a foreign tax credit, credit for child and dependent care expenses, education credits from Form 8863, retirement savings contributions credit, and residential energy credit.
- Schedule 4 Other Taxes: Taxpayers with other kinds of tax obligations like self-employment tax, unreported Social Security and Medicare tax, additional tax on IRAs, other qualified retirement plans, and other tax-favored accounts, household employment taxes, etc., must use this schedule.
- Schedule 5 Other Payments and Refundable Credits: File this if the IRS owes you credits for the 2018 estimated tax payments, net premium tax credit, amount paid with request for
extension to file, excess Social Security and tier 1 RRTA tax withheld, and federal tax credit on fuels.
- Schedule 6 Foreign Address and Third Party Designee: If you are living overseas and want to authorize another representative aside from your tax preparer to correspond with the IRS for you.
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Summary of Tax Reform Changes That May Reflect in Tax Form 1040
Here are some details which will find their way into the text and items for Tax Form 1040:
- The IRS has scrapped Forms 1040A and 1040EZ.
- The due date for returns: April 15, 2019, or April 17 for residents of Maine and Massachusetts
- Reduction in tax rates to 10%, 12%, 22%, 24%, 32%, 35%, and 37%
- Increase in standard tax deduction amounts to $12,000 for single or married filing separately, $24,000 for married filing jointly, and $18,000 for the head of the household.
- The Tax Cuts and Jobs Act has suspended personal exemptions.
- An increase in child tax credit to $2000 per qualifying child with the ceiling for the gross income threshold to qualify increased to $200,000 for single filers and $400,000 for married filing jointly.
- Additional $500 nonrefundable credit for other dependents.
- The IRS requires a Social Security number to claim child tax credits.
- You can now deduct up to 20% of your qualified business income from your qualified trade or business and 20% of your REIT dividends and qualified PTP income.
- Adjusted gross income limits no longer cap overall itemized deductions.
- The sum of state and local income, sales, and property tax deductions now cap only at a ceiling of $5,000 for single filers and $10,000 for married filing jointly.
- Taxpayers can no longer deduct job-related or miscellaneous itemized deductions which were part of the 2%-of-adjusted-gross-income-floor.
- Alternative minimum tax exemption amount increased to $70,300 for single filers, $109,400 for married filing jointly or qualifying widows and widowers, and $54,700 for married filing separately.
- AMT income level exemptions cap ceiling rose to $500,000 for single filers and $1,000,000 for married filing jointly.
- You may have to include deferred foreign income on your return if you own a foreign corporation directly or indirectly.
- You must include your Global Intangible Low Tax Income (GILTI) in your return if you own shares in a controlled foreign corporation.
- The law repealed the domestic production activities deduction with limited exceptions.
- Some tax benefits like the qualified tuition and fees, nonbusiness energy property credit, mortgage insurance premium deduction, have expired. You will need to check with the IRS for any pending updates about these benefits.
Where Can I Find Out More Information About Changes in Our Taxes and Tax Returns?
The IRS gives taxpayers comprehensive information about the changes the Tax Cuts and Jobs Act brought about in their tax reform resource page. You can also learn more about the changes in the tax form 1040 here.
In summary, Form 1040 should bring about a more streamlined approach to filing our taxes. Understanding how the form works and how it differs from the previous tac form 1040a process should help you make the transition much more smoothly.
Have you filed IRS Form 1040? Which part of the form looks confusing to you? Tell us about your experiences and tips in the comments section below.
If you owe back taxes, visit taxreliefcenter.org for more information on tax relief options.
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Editor’s Note: This post was originally published on April 18, 2018, and has been updated for quality and relevancy.