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Entries in Tax Forms (3)

Wednesday
Feb082012

Tax Tip: Know Your Filing Status

Creatas/Thinkstock(NEW YORK) -- When you fill out your 1040 form this tax season, you will need to choose your filing status. Depending on which box you check, the choice could wind up costing you a lot of money.

H&R Block's Kathy Pickering gave one woman's story: "She was a single woman who was caring for a number of kids, some nieces and nephews full time, and she had filed as a single filing status whereas had she filed head of household, she would have had a more favorbale status."

Accountants say it's a good idea to run the numbers if you fall under more than one filing status. For instance, many married couples wonder whether it makes more sense to file separate returns than filing a joint 1040.

As Eric Smith with the IRS explains, only about 1 or 2 percent of married couples find filing separately works better for them.

"There are some deductions and credits that are not available if you file separately, but only are available if you file jointly, so that's another consideration," he says.

Copyright 2012 ABC News Radio

Tuesday
Feb072012

Tax Tip: Which Form Should You Use When Filing?

Ryan McVay/Photodisc/Thinkstock(NEW YORK) -- Once you have all your tax paperwork in front of you, the next step is figuring out which form to use when you file.

There's the full 1040 form, which anyone can use, but there's also the simpler 1040A and 1040EZ.  So which one is right for you? 

As Eric Smith from the IRS explains, "The 1040EZ targets primarily single individuals and married couples who don't have any kids and have a very simple income structure."

With the EZ form, you cannot itemize your deductions and your taxable income has to be less than $100,000.

If your situation is a little more complicated, the 1040A form might be a better fit.

"Some tax benefits that can be claimed that are not available on the EZ, such as the child care credit, child tax credit, the EITC -- earned income tax credit -- is available on the 1040A," Smith says.

However, if you're reporting any self-employment income, or money from the sale of a property, than longform 1040 is the choice for you.

Copyright 2012 ABC News Radio

Sunday
Feb132011

Tax Tip: Using the Right Forms

Photo Courtesy - Getty Images(NEW YORK) -- There are literally hundreds of IRS tax forms. Fortunately, there are only a dozen or so that apply to most people. When it comes to choosing which 1040 to use, Mary Beth Franklin from Kiplinger's Personal Finance says “pick the simplest tax form for you.”

“If you simply have wage income W-2, you can go with the 1040EZ,” Franklin said. That one won't allow you to make anything but the standard deduction, and it might be the wrong move, according to accountant Janice Hayman.

“A lot of people file the short form mistakenly when they truly do have enough to use the long form and itemize their deductions," Hayman said. "What is commonly overlooked are the state and local income taxes that are right there on their W-2 form. They are part of the itemized deductions.”

You have to use the full form -- a 1040 -- if you want to itemize your deductions, make more than $100,000, or have self-employment income.

Copyright 2011 ABC News Radio







ABC News Radio