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Hello, I’m Lisa Lewis, CPA from Turbo Tax
with important news about filing your taxes on the 1040EZ form.
If you are like most taxpayers, the less time you spend
preparing your income tax return, the better.
Luckily, if you don’t anticipate deducting any expenses
or aren’t eligible for most tax credits, you can prepare
your taxes pretty quickly by using the 1040EZ form.
If you are unmarried and considering using the 1040EZ,
you will be required to use the single filing status.
You may want to check to see if you are eligible to file as head of household –
the additional tax savings may be worth the extra time.
The benefit of filing as head of household is the
larger standard deduction it provides you with
in comparison to the single filing status.
If you do have the option of filing as head of household,
the additional tax savings may be worth the extra time
it will take to file on the 1040A or 1040.
Reporting dependents and claiming exemptions for them
is a common way for taxpayers to reduce their tax bill.
But when you file on the 1040EZ, the IRS
doesn’t allow you to report any dependents.
You can, however, claim dependents
on the 1040A and the 1040 forms—
so it’s beneficial to evaluate if your eligible to
claim dependents before settling on the 1040EZ form.
Another limitation of the 1040EZ, is that it doesn't
allow you to itemize deductions. You can only
claim the standard deduction. Itemizing your deductions
on Schedule A is only an option when you're using the longer 1040 form.
So, if you have a number of deductions you will have to decide
whether itemizing or claiming the standard deduction
will save you more in tax. TurboTax can help with this.
Lastly, the biggest tax savings of all
is oftentimes the result of claiming tax credits,
like those for education expenses, for example.
However, the only tax credit you can take on the 1040EZ
is the earned income tax credit.
It is important to understand that a tax credit
reduces your tax bill on a dollar-for-dollar basis,
whereas a deduction only reduces your taxable income.
Given the potential tax savings, your eligibility to claim
a tax credit may be reason enough not to use the 1040EZ.
Not sure which form to use?
When you file with TurboTax, you don’t need to know a thing about tax forms.
We’ll ask you simple questions and determine the filing status
and forms that will give you your biggest tax refund.
For more information about tax deductions visit TurboTax.com.