Navigating Tax Filing Changes: The Evolution and Retirement of IRS Form 1040EZ


IRS Form 1040EZ, once a tax-filing staple for those with straightforward financial situations, has faded into history. This comprehensive article delves into the evolution, limitations, and alternatives to Form 1040EZ, providing valuable insights into the world of tax filing.

The evolution of form 1040EZ

Form 1040EZ, introduced in 1982, aimed to simplify tax filing for individuals with uncomplicated financial circumstances. It was shorter, had fewer complexities, and was designed for taxpayers who met specific eligibility criteria.

Eligibility criteria for Form 1040EZ

To use Form 1040EZ, taxpayers had to meet specific criteria:

  • Taxable income of less than $100,000
  • Interest income under $1,500
  • No dependents
  • Age below 65 at the end of the tax year
  • Not blind as of the end of the tax year

Additional requirements included restrictions on deductions, types of income, and credits, ensuring it was suited for uncomplicated financial situations.

The simplicity and appeal of Form 1040EZ

For many taxpayers, especially those new to the world of taxes, Form 1040EZ was a lifeline. Its appeal lay in its simplicity:

  • Easy-to-understand questions and calculations
  • Fewer sections compared to the standard Form 1040
  • Quick filing process

Form 1040EZ: limitations and drawbacks

While Form 1040EZ provided simplicity, it had its drawbacks, which eventually led to its retirement:

Income restrictions

One significant limitation was the form’s narrow scope of income sources. It could only be used by those with income from wages, salaries, tips, taxable scholarships, or fellowship grants. This precluded any taxpayer with income from other sources, such as foreign income or self-employment, from using the form.

No provisions for dependents

Form 1040EZ did not allow individuals to claim dependents. This was a significant limitation for families or those supporting relatives.

Limitations on deductions

One of the most significant drawbacks was the lack of deductions. Taxpayers couldn’t itemize their deductions or claim specific deductions, such as the student loan interest deduction or deductions for IRA contributions. This limitation meant that those who could have benefited from such deductions had to forgo them.

Health coverage reporting

Form 1040EZ also lacked a provision for reporting health coverage, which became a requirement under the Affordable Care Act. Those using Form 1040EZ were required to separately report their health coverage status, adding complexity to an otherwise simplified form.

The transition: form 1040EZ vs. form 1040

Comparing Form 1040EZ with its more comprehensive counterpart, Form 1040:

  • Form 1040EZ offered fewer deductions and credits, such as the earned income credit (EIC).
  • It lacked provisions for claiming dependents.
  • Form 1040 allowed for various income sources and deductions.

Form 1040EZ was ideal for those with uncomplicated tax situations, while Form 1040 accommodated more diverse financial scenarios.

The retirement of form 1040EZ

In 2018, the IRS made the pivotal decision to retire Form 1040EZ. This marked the end of an era in tax filing. The move aimed to provide taxpayers with greater flexibility to tailor their returns according to their unique financial circumstances.

Current status

As of now, the IRS no longer publishes Form 1040EZ. However, taxpayers can still use it for tax years 2017 and earlier, accessed through the IRS website. While it has been phased out, its simplicity and historical significance are remembered.

Form 1040, 1040A, and 1040EZ: understanding the differences

Form 1040A, another simplified tax form, was designed for those with income below $100,000 who did not exercise any incentive stock options throughout the year. All three forms, including Form 1040, were replaced in the 2018 tax year by a redesigned Form 1040.

Pros and Cons

Here is a list of the benefits and drawbacks associated with Form 1040EZ.

  • Simplicity, ideal for taxpayers with basic financial situations
  • Quick and straightforward filing process
  • Easy-to-understand questions and calculations
    • Limited to taxpayers with very basic financial circumstances
    • Restrictions on income sources and deductions
    • No provision for claiming dependents

The bottom line

Form 1040EZ, though retired, served as an entry point for many taxpayers into the world of tax filing. Its simplicity made it suitable for individuals with uncomplicated financial situations. However, the IRS’s decision to discontinue it in 2018 means that all taxpayers must now use Form 1040 for their annual filings, ensuring greater flexibility and inclusivity in the tax-filing process.

Frequently asked questions

Why was Form 1040EZ discontinued?

Form 1040EZ was discontinued to provide taxpayers with more flexibility in tailoring their tax returns. The IRS opted for a more inclusive approach, allowing taxpayers to claim a wider range of deductions and credits. This shift aimed to better accommodate taxpayers with varying financial situations.

Can I still use Form 1040EZ for tax year 2019 or later?

No, you cannot use Form 1040EZ for tax years 2019 and beyond. The IRS phased out this form starting from the 2018 tax year, replacing it with a redesigned Form 1040.

Were there any efforts to improve Form 1040EZ before its discontinuation?

There were discussions and debates about potential improvements to Form 1040EZ. Some proposed making the form more flexible by allowing certain deductions and credits while retaining its simplicity. However, the IRS ultimately chose to discontinue it in favor of a unified Form 1040 that could accommodate a broader range of taxpayers.

What was the impact of Form 1040EZ’s discontinuation?

The discontinuation of Form 1040EZ had mixed effects. While it removed a simplified option for taxpayers with basic financial situations, it allowed for a more flexible and inclusive approach to tax filing. Taxpayers with diverse financial circumstances could now claim a broader range of deductions and credits, potentially reducing their tax liabilities.

Key takeaways

  • IRS Form 1040EZ, introduced in 1982, simplified tax filing for individuals with basic financial situations.
  • To use Form 1040EZ, taxpayers had to meet specific eligibility criteria, including income limitations and no dependents.
  • The form’s appeal was its simplicity and quick filing process, making it ideal for newcomers to tax filing.
  • However, Form 1040EZ had limitations, including restrictions on income sources, deductions, and no provisions for dependents.
  • Comparing Form 1040EZ with Form 1040 highlighted the differences in flexibility and eligibility.
  • In 2018, Form 1040EZ was retired to provide taxpayers with greater flexibility in their tax filings.
  • While Form 1040EZ is no longer published, it can still be used for tax years 2017 and earlier.
  • The retirement of Form 1040EZ marked a shift toward more inclusive tax filing options.
  • Form 1040, Form 1040A, and Form 1040EZ were replaced with a redesigned Form 1040 in the 2018 tax year.
View Article Sources
  1. Form 1040-ES – Internal Revenue Service
  2. How much do I owe the IRS? Find out if you owe back taxes – SuperMoney
  3. The 10 best mobile tax apps to use this aeason – SuperMoney
  4. Do I have to include my child’s income on my tax return? – SuperMoney