Answer to Question #266519 in Financial Math for Noah

Question

Which of the following statements is false for a person wanting to use and file a Form 1040EZ tax return?

a. Taxable income is less than $100,000.

b. No more than 2 dependents, in addition to the taxpayer plus spouse. c. Taxable interest is not over $1,500.

d. Filing status is either single or married filing jointly only.

Answer 1

The IRS Form 1040-EZ was the simplest and shortest of the 1040 forms. Except for the Earned Income Tax Credit (EIC), which is available to certain low-income taxpayers, you wouldn't be able to itemize deductions, make income adjustments (such as contributions to an IRA), or claim any tax credits if you used the standard deduction. If you had any self-employment, alimony, dividends, or capital gains income, you couldn't utilize 1040-EZ.

If all of the following apply, the person can utilize Form 1040-EZ:

• Filing status is either single or married filing jointly only.
• Taxable income is less than $100,000
• You don't include any dependents on your tax return.
• You don't have to itemize your deductions.
•  Taxable interest is less than $1,500.
• Wages, salaries, tips, taxable scholarship and fellowship awards, unemployment compensation, and Alaska Permanent Fund dividends are the sole sources of income for you.

Thus option (b) No more than 2 dependents, in addition to the taxpayer plus spouse is false