Which tax form should I use?

It's almost time for taxes again! One question that you might be asking is, which tax form - 1040, 1040A, or 1040EZ - is the correct one for me to use?

According to Bankrate.com, you should use the simplest one that you can!

1040EZ is the simplest form that you can use. You can use it if you're under 65 and single or married filing jointly. If you're married, your spouse must also be under 65 You need to have no dependents, and your income must be less than $100,000. (I didn't realize the income limit was so high - wow!) You can't have interest income above $1500.

But even if you fit these criteria, 1040EZ might not be the right choice for you. You can't take most deductions (the exception being the Earned Income Tax Credit). So if you pay a mortgage, make charitable deductions, contribute to a retirement account, or have deductible health or education expenses, this form is not right for you.

But if it is, you can use the online versions of certain tax software for free!

On to the next form, 1040A. You're eligible to use this one if your income is below $100,000, you don't itemize deductions, and you don't have capital gains or losses.  There are several deductions allowed, including IRA contributions and education expenses.

Form 1040 is the most complicated, but covers a lot of situations.  If you want to itemize your deductions, this is your form.  If you have self-employment income, you'll have to use 1040.  If your income is over $100,000, interest income over $1500, or if you have capital gains and losses, you'll end up here.  It's more complicated, but using this form can save you a lot on taxes that you won't get from the other two forms.

If you use tax software, the decision of which form to use will be made for you!  But if you fill out the forms yourself, I hope these tips will help you make your decision of which form to use.

For more frugal tips, please go to my Linkup Parties page and check out the bloggers listed under Frugal Tips Linkups.  There are lots of great ideas on each blog and I'm sure you'll find lots of wonderful tips!

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