What Was Form 1040EZ: Income Tax Return for Single and Joint Filers With No Dependents?

IRS Form 1040EZ: Income Tax Return for Single and Joint Filers with No Dependents was the shortened version of the Internal Revenue Service (IRS) Form 1040. This form was for taxpayers with basic tax situations and offered a fast and easy way to file income taxes. 

The form was discontinued as of the 2018 tax year in favor of the redesigned Form 1040.

Who Could File Form 1040EZ: Income Tax Return for Single and Joint Filers With No Dependents?

To use the form, a taxpayer had to have taxable income of less than $100,000, less than $1,500 of interest income, and claim no dependents. Other requirements for filing the Form 1040EZ included:

• The taxpayer and their spouse, if married filing jointly, had to be under age 65 at the end of the relevant filing period.
• They could not be blind as of the end of the relevant filing period.
• The filer could take no deductions for student loan interest, educator expenses, tuition and fees, or itemized deductions.
• If the filer received interest income, they could not have been required to file Schedule B, didn’t have amounts in boxes 11, 12, or 13 of Form 1099-INT or boxes 6 and 10 of Form 1099-OID, and didn’t earn any interest as a nominee.
• Tax credits for retirement savings, health coverage, and education were not allowed.
• The tax filer could not have received any advance earned income credit (EIC), although they would have been allowed to claim the EIC when filing Form 1040EZ.
• The filer could not be a debtor in any Chapter 11 bankruptcy case that was filed after October 16, 2005.
• The filer, their spouse, if married filing jointly, or any of their dependents for which they claimed the personal exemption didn’t receive any advance payments of the premium tax credit offered for health coverage plans sold on the Marketplace.
• The filer doesn’t owe any household employee taxes on wages paid to household employees.

For most individuals, the 1040EZ was the first tax form they ever completed. Consider a typical high-school student employed part-time. Provided they met the income qualifications, the 1040EZ will likely be the most straightforward and appropriate form to file. 

Form 1040EZ vs. Form 1040

Form 1040EZ had only a few credits or deductions available to taxpayers. Filers were able to include an earned income credit (EIC) and elect nontaxable combat pay.

For most tax years, Form 1040 had 80% more lines than form 1040EZ. One significant difference was that Form 1040 had fields to include information about dependents, while 1040EZ did not allow individuals to claim dependents. Similar to the standard form, the EZ version had sections to record wages, salaries and tips, and taxable interest under $1,500. The filer was also able to include unemployment compensation payments.

Form 1040EZ allowed filers to claim income from wages, tips, salaries, taxable grants or scholarships, the Alaska Permanent Fund, and unemployment compensation. Form 1040, though, had at least 16 income categories.

Categories available on the standard form included dividend payments, retirement account distributions, and farm and rental income. Form 1040 also allowed the entry of Social Security benefits, alimony, and other forms of income. This form also had a long list of deductions, ranging from education costs to healthcare savings plan contributions.

What Is 1%/10 Net 30?

The 1%/10 net 30 calculation is a way of providing cash discounts on purchases. It means that if the bill is paid within 10 days, there is a 1% discount. Otherwise, the total amount is due within 30 days.

Understanding 1%/10 Net 30

The 1%/10 net 30 calculation represents the credit terms and payment requirements outlined by a seller. The vendor may offer incentives to pay early to accelerate the inflow of cash. This is particularly important for cash-strapped businesses or companies with no revolving lines of credit. Companies with higher profit margins are more likely to offer cash discounts.

Although the numbers are always interchangeable across vendors, the standard structure for offering a payment discount is the same. The first number will always be the percentage discount. This figure will indicate the total percentage discount on the invoice prior to shipping or taxes that may be discounted upon early payment.

Special Considerations

Discount terms like 1%/10 net 30 are virtual short-term loans. This is because if the discount is not taken, the buyer must pay the higher price as opposed to paying a reduced cost. In effect, the difference between these two prices reflects the discount lost, which can be reported as a percentage. This percentage is called the cost of credit.

When the credit terms are 1%/10 net 30, the net result becomes, in essence, an interest charge of 18.2% upon the failure to take the discount.

The accounting entry for a cash discount taken may be performed in two ways. The gross method of purchase discounts assumes the discount will not be taken and will only input the discount upon actual receipt of payment within the discount period.

Therefore, the entire amount of receivable will be debited. When payment is received, the receivable will be credited in the amount of the payment and the difference will be a credit to discounts taken. The alternative method is called the net method. For a discount of 1%/10 net 30, it is assumed the 1% discount will be taken. This results in a receivable being debited for 99% of the total cost.

Example of 1%/10 Net 30

For example, if “$1000 – 1%/10 net 30” is written on a bill, the buyer can take a 1% discount ($1000 x 0.01 = $10) and make a payment of $990 within 10 days, or pay the entire $1000 within 30 days.

The second number is always the number of days of the discount period. In the example above, the discount period is 10 days. Finally, the third number always reflects the invoice due date.

What Was Form 1040-A: U.S. Individual Tax Return?

Form 1040-A of the Internal Revenue Service (IRS) was a simplified version of Form 1040 used by U.S. taxpayers to file an annual income tax return. To have been eligible to use Form 1040-A, an individual needed to meet certain requirements such as not itemizing deductions, not owning a business, and having a taxable income of less than $100,000. Unofficially known as the “short form,” Form 1040-A was eliminated for the 2018 tax year in favor of the redesigned Form 1040 that debuted that year.

Who Had to File Form 1040-A: U.S. Individual Tax Return?

Most U.S. taxpayers use IRS Form 1040 to file their income tax returns. Form 1040 is a detailed form that offers taxpayers with complex investments, itemized deductions, multiple tax credits, and more than $100,000 in annual income more opportunities to lower their tax liability. Because additional paperwork is usually required with Form 1040, individuals with simpler tax situations previously had the option to use Form 1040-A instead.

Form 1040-A was a simplified version of Form 1040. The two-page form allowed taxpayers to report ordinary income, some deductions, and credits. Individuals who fell under any of the five status options—single, head of household, married filing separately, married filing jointly, or widowed—could file their tax returns using the 1040-A. Though Form 1040-A was available to taxpayers of any age and filing status, not everyone qualified to use this form.

Tax filers who used 1040-A must have earned less than $100,000 taxable income and not have exercised any incentive stock options (ISO) during the tax year. The income reported must have been earned as a wage, salary, tip, capital gain, dividend, interest income, unemployment compensation, pension, annuity, taxable Social Security and railroad retirement benefit, taxable scholarship or grant, and Alaska Permanent Fund dividend. Any other form of income, such as business income, needed to be reported on the more complex Form 1040.

How Did Form 1040-A Work?

Form 1040-A also gave taxpayers the opportunity to claim several tax deductions to reduce their taxable income. However, the only deductions they could claim included student loan interest, post-secondary tuition and fees, classroom expenses, and individual retirement account (IRA) contributions. Taxpayers using Form 1040-A could not claim itemized deductions. This limitation meant that if an individual qualified for other deductions from sources such as charitable donations or mortgage interest, and the total itemized deductible amount was more than the standard deductions, it would not have been advantageous for them to use 1040-A.

Form 1040-A also could be used to claim tax credits. Tax credits reduce the bottom line or total tax bill of a taxpayer. The credits that could be claimed using this form were the American Opportunity Tax Credit (AOTC), Earned Income Credit (EITC), child tax and additional child tax credit, child and dependent care credit, credits for the elderly or disabled, and retirement savings contribution credit.

Form 1040-A vs. Form 1040-EZ

Another variant of Form 1040 was Form 1040-EZ, which was even simpler and easier to fill out than Form 1040-A and was also eliminated starting with the 2018 tax filing. But with Form 1040-EZ, the individual had to file as either a single taxpayer or as married filing jointly; they could not claim deductions and could only claim the EIC.

Although Form 1040-A was slightly more complex than Form 1040-EZ, it was still relatively simple compared to 1040. Once their financial situation became complicated with dependents, special deductions, and credits—such as those associated with post-secondary education tuition—most taxpayers needed to switch from filing with the 1040-EZ to the 1040-A.

The redesigned Form 1040 that debuted with the 2018 tax year is designed to be much simpler to use than its predecessor. For this reason, the IRS eliminated both Form 1040-A and Form 1040-EZ.

What Is Form 1040: U.S. Individual Tax Return?

Form 1040 is the standard Internal Revenue Service (IRS) form that individual taxpayers use to file their annual income tax returns. The form contains sections that require taxpayers to disclose their taxable income for the year to determine whether additional taxes are owed or whether the filer will receive a tax refund.

Understanding Form 1040

Form 1040 needs to be filed with the IRS by April 15 in most years. Everyone who earns income over a certain threshold must file an income tax return with the IRS. Keep in mind that businesses have different forms to report their profits.

Form 1040 is available on the IRS website and has two pages that must be filled out. Form 1040 can be mailed in or e-filed. Tax filers are asked for their filing status along with their personal information, such as their name, address, Social Security number (some information on one’s spouse may also be needed), and the number of dependents. The form also asks about full-year health coverage and whether the taxpayer wishes to contribute $3 to presidential campaign funds.

The 1040 income section asks the filer to report wages, salary, taxable interest, capital gains, pensions, Social Security benefits, and other types of income. The new tax legislation eliminated many deductions, including for unreimbursed employee expenses, tax-preparation fees, and moving for a job (except for military on active duty).

The form uses what the IRS terms a building block approach and allows taxpayers to add only the schedules they need to their tax returns. Some individuals may need to file one or more of six new supplemental schedules with their 1040 in addition to long-standing schedules for items like business income or loss. This depends on whether they’re claiming tax credits or owe additional taxes. Many individual taxpayers, however, only need to file a 1040 and no schedules.

Types of Form 1040

Taxpayers in certain situations may need to file a different variant of the 1040 form instead of the standard version. Below are the options.

Form 1040-NR

A number of nonresident aliens or their representatives need to file this form, including:

• Those who are engaged in trade or business in the United States
• Representatives of a deceased person who would have had to file a Form 1040-NR
• Those who represent an estate or trust that had to file a 1040-NR

The IRS also produces the 1040-SS and 1040-PR. The 1040-SS is for residents of American Samoa, the CNMI, Guam, Puerto Rico, or the U.S. Virgin Islands who have net self-employment income and do not have to file Form 1040 with the U.S. Form 1040-PR is the Spanish-language equivalent of Form 1040-SS.

Form 1040-ES

This form is used to determine and pay estimated quarterly taxes. The estimated tax applies to income that isn’t subject to withholding, which includes earnings from self-employment, interest, dividends, and rents. This may also include unemployment compensation, pension income, and the taxable portion of Social Security benefits.

Form 1040-V

This is a statement accompanying a taxpayer’s payment for any balance on the “Amount you owe” line of the 1040 or 1040-NR.

Form 1040-X

If a filer makes a mistake or forgets to include information on any 1040 form, Form 1040-X is used for making changes to previously filed 1040s.

Form 1040-SR

The IRS introduced a new 1040 form for seniors in 2019, Form 1040-SR. Changes include a larger font, no shading (shaded sections can be hard to read), and a standard deduction chart that includes the extra standard deduction for seniors. Seniors who fill out their taxes online won’t notice the difference, but those who do it on paper should benefit.

Standard Deductions on Form 1040

The 1040 income section asks taxpayers for their filing status. This filing determines the taxpayer’s standard deduction. The table below highlights the deductions for the 2022 and 2023 tax years. Keep in mind that you file 2022 taxes in 2023 and 2023 taxes in 2024.