What is a 1041 Form? And what is the difference between 1040 and 1040 A? When should you file 1040a or 1040? And what about 1040EZ and 1040 differences? When filing taxes, how can you tell all these forms apart?
Filing taxes can be pretty confusing, especially when IRS forms have nearly similar names. No wonder 44 percent of Americans consider the tax system to be pretty complex.
Generally, paper returns tend to contain more errors (21 percent) than e-filed versions (0.5 percent). So, if you are not careful, you may opt for the wrong form and file taxes inaccurately. For these reasons, it helps to understand some of the most used forms, such as Form 1040 and nearly similar forms like Form 1041.
What Is a 1040 Form?
Form 1040 is the basic form that you will use when filing individual income taxes as a U.S. resident. You will use it to calculate taxable income from various sources. For example, you can include your wages, tips and commissions.
And you can include any tax credits or expenses you can deduct to reduce your taxable income within that same form to determine how much the IRS owes you as a tax refund or any additional taxes you owe. For example, you can claim several dependents and claim refundable child tax credits, self-employment taxes or charitable contributions.
However, you may need to provide additional information depending on your filing status, income sources or financial situation. These may necessitate different versions of Form 1040 or related documents you must attach and submit with the basic form. And that is where 1040 vs. 1040a or 1040EZ differences may come in.
Typically, Form 1040 may be submitted together with Schedule 1, 2 and 3, depending on the types of income sources you are declaring that are not covered under your regular income or taxes owed or credits you are claiming. For example, Schedule 1 includes taxable refunds, gambling and alimony income. On the other hand, Schedule 2 will include taxes you owe, such as self-employment taxes. And Schedule 3 includes tax credits you want to claim.
In addition, you can find Schedules A, B and C, which are for itemizing deductions, declaring various interests and including business profits and losses respectively.
1. The Difference Between 1040 and 1040A
The primary difference between tax return 1040 and 1040A is simply a matter of which tax years it is used for. Form 1040A is an annual income tax return for filing taxes for the tax years before 2018.
For anything that comes after, you need to use Form 1040 or 1040-SR. The latter version is mostly for seniors over the age of 65 years who receive Social Security payments in addition to deferred payments and retirement distributions. However, you can use both 1040 and 1040-SR to also file tax returns from the tax year 2015 and later.
Read More: Form 1040: What's Changed for Your 2020 Tax Return
2. The Difference Between 1040 and 1040-EZ
Think of Form 1040-EZ as the shortened version of the standard Form 1040. It’s an excellent choice for singles or couples filing jointly who have no intention of claiming dependents. However, it can only be used by taxpayers who want to file taxes for the years before 2018.
If you meet the other criteria but are filing taxes for 2018 or later, you must use Form 1040 or 1040-SR.
What Is a 1041 Form?
You can file Form 1041 if you represent an estate or trust of someone who has passed on or declared bankruptcy. Typically, a fiduciary is responsible for the tax filing process using this form.
When filing the form, you should include the estate or trust’s income, present and future distributions to beneficiaries, tax liabilities and employment taxes for those being paid as household employees. Also, you can include any associated net investment income.
It is critical that you understand when to use Form 1041 or 1040. Also, when using these forms, you should know which schedules and versions you can attach. That way, you won’t end up being forced to amend your tax returns.
- Pew Research.Org: 5 facts on how Americans view taxes
- IRS.Gov: Theme 6: Understanding the IRS - Lesson 3: Methods of Filing
- IRS.Gov: Form 1040
- APSU.Edu: IRS Schedule 1, 2, and 3
- IRS.Gov: About Form 1040-A, U.S. Individual Income Tax Return
- IRS.Gov: About Form 1040-SR, U.S. Tax Return for Seniors
- IRS.Gov: About Form 1040-EZ, Income Tax Return for Single and Joint Filers With No Dependents
- IRS.Gov: Instructions for Form 1041 and Schedules A, B, G, J, and K-1 (2020)
I have been a freelance writer since 2011. When I am not writing, I enjoy reading, watching cooking and lifestyle shows, and fantasizing about world travels.