Tax Form 1040EZ Instructions

Elizabeth Rosen
by Elizabeth Rosen, Contributor

 

IRS Tax Form 1040EZ is the shortest federal income tax form. It is designed for taxpayers whose filing status is “single” or “married filing jointly” with no dependents. The 1040EZ is less complex than Tax Form 1040 and Tax Form 1040A, so it generally takes less time to fill out and process. However, it may be more beneficial to use Form 1040 or Form 1040A, since those forms allow taxpayers to claim “head of household” status (which typically results in a lower tax than filing as “single”), dependents, and various credits and adjustments to income.

Name, Address, and SSN

Provide your name, address, and Social Security Number (SSN). Note that a missing or incorrect SSN can result in an increase of tax, a delayed tax refund, and a reduced tax refund. If you are a resident or nonresident alien, provide your Individual Taxpayer Identification Number (ITIN) wherever your SSN is requested on the tax return.

Income

The IRS defines “income” as any money that you receive during the given tax year. Most people can simply review their W-2s (Wage and Tax Statements) to determine their annual income.

Taxable income, generally speaking, is the gross income of an individual or corporation, less any allowable tax deductions. It’s important to realize that taxable income can encompass more than just your annual salary.  Taxable income can include profits from stocks or real estate sales, as well as winnings from the lottery, betting on horse races, or any casino (domestic or abroad). Even the cash value of bartered items is considered taxable income.

Income that may be part of your gross income but is not identified as “taxable income” would include: child support, proceeds from life insurance policies, inheritances, Workers Compensation payments, Welfare benefits, compensation awarded as a result of physical injury, education scholarships or grants, and income paid to your retirement account (either a 401k or IRA, up to a certain amount).

Overall, taxable income is that portion of your gross income which is subject to taxation by the governing authority, minus any allowable itemized or standardized deductions. Your taxable income is basically the amount of your income that is subject to income tax. [What qualifies as “taxable income” is defined in Section 63 of the Internal Revenue Code, and “gross income” is defined in Section 61 of the Internal Revenue Code.]

Payments, Credits, and Tax

Withholding tax (also known as “payroll withholding”) is essentially income tax that is withheld from your wages and sent directly to the IRS by your employer. In other words, it’s like a credit against the income taxes that you must pay for the year. By subtracting this money from each paycheck that you receive, the IRS is basically withholding your anticipated tax payment as you earn it ― sometimes called “pay-as-you-earn” taxation. While you cannot avoid withholding tax altogether, you can control the amount that is withheld from each paycheck when you fill out your W-4 tax form.

The Earned Income Credit (EIC) -- also called the “Earned Income Tax Credit” -- was created to help low-income workers, self-employed individuals, and their families. The Earned Income Tax Credit is being utilized by more taxpayers than ever—some for the first time–as a means to offset their loss of (or reduction in) income. The Earned Income Tax Credit can result in either a tax credit to offset income tax due or a tax refund.

Refund

A tax refund is issued when the amount of income tax that you paid is more than what you actually owed for that year. The IRS has an electronic system in place, called “Where’s My Refund? – It’s Quick, Easy, and Secure.” This is an online tool that can help you determine the status of your tax refund using the Internet. If you filed electronically, you will receive information about your refund within 72 hours after the IRS acknowledges receipt of your e-filed tax return. If you file by paper mail, it will take the IRS longer to process your tax return and you will not able to use the Where’s My Refund? system for at least 3 weeks.

Amount You Owe

Individuals have many different options for paying their federal income taxes. You can pay electronically (online) with a credit card, debit card, or e-check (electronic check). Or you can pay your taxes by paper mail with a check, money order, or cashier’s check. Additionally, if you wish to pay in cash, there is an option for that as well.

Whether you are filing late and/or paying late, the IRS urges taxpayers to pay their bill in full. It is always recommended that you pay as much of what you owe as you can, and as soon as you can. The longer you wait, the more late fees and interest charges that can accrue.

Installment Agreement -- If you cannot pay the full amount due with your income tax return, you can ask the IRS if they will allow you to make monthly installment payments for the full amount or a partial amount. However, keep in mind that you will be charged interest and also possibly a late payment penalty on the tax not paid by the date your return is due, even if your request to pay in installments is granted.

Third Party Designee

By checking “Yes” you are authorizing another person (tax preparer, family member, friend) to discuss your tax return with the IRS. Provide their name, phone number, and personal identification number (PIN) (they may choose any 5 digits). Note that you are not authorizing the designee to receive your tax refund, bind you to anything, or represent you before the IRS.

Sign Your Return

The 1040EZ tax form is not valid unless you sign it. If you are filing a joint tax return, your spouse must also sign the form.

Assemble Your Return

Make sure you gather all the appropriate documents (your 1040EZ form, plus any attachments or schedules) needed to file your return.