Who should prepare your income tax return?
The answer to this question depends on which return you are filing. To review, there are
3 choices. (The criteria for filing these returns should not be confused with the criteria for free tax preparation which will be discussed next week).
Form 1040EZ: You may file this form if (shortened list):
- Your filing status is single or married filing jointly.
- You are not claiming any dependents.
- You do not have any adjustments to income , such as IRA or Health Savings Account contributions, or the educator’s expense deduction.
- You and your spouse if filing jointly were under age 65 in 2009.
- You had only taxable wages, salaries, and tips, and your taxable interest is less than $1,500
- Your taxable income is less than $100,000.
- Form 1040A (Shortened list):
- Your taxable income is less than $100.000.
- You had no income from rentals, businesses, partnerships, S corporations, or security sales.
- You do not itemize deductions.
- Your only adjustments to income are educator expenses, IRAs, student loan interest, or the tuitions and fees deduction.
- You are claiming only a truncated list of the various tax credits offered.
Form 1040: Anyone who does not qualify to file Form 1040EZ or 1040A must file Form 1040, meaning those with income from security sales, rentals, farm income, pass-through entities (partnerships, S corporations, and trusts), and businesses, and those claiming certain credits, such as the first-time homebuyer’s credit.
So, who should prepare your return? If you qualify to file Form 1040EZ or 1040A you can probably prepare it yourself, either online with IRS Free File, with the assistance of taxpayer advocacy groups such as Volunteers In Tax Assistance (VITA), or using purchased tax preparation software. If you have to file Form 1040, use purchased tax preparation software if your return is relatively simple. If, however, you have a business, rental properties, or income from pass-through entities, use a tax professional.
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