Federal and State tax returns: Which is easier?
The IRS is feared by most people, no matter how on the up and up you might be. The IRS code is, to say the least, voluminous, with caveats and worksheets you might easily drown in while trying to correctly complete your federal tax return.
If you’re able to use the short form, 1040-EZ, you probably won’t get a headache in the process, but you also won’t get a refund sizable enough to do more than pay your past due power bill. However, before you get too excited at this easiest of filing methods, be sure you qualify to use the 1040EZ tax form.
If you don’t meet the IRS criteria for using this tax form, you’ll be back at square one. If you file without meeting the criteria, your tax return will be rejected and you’ll need to refile, using the right IRS tax form, thus delaying a refund.
Worse yet, this may trigger an audit because there will be information you did not include in your filing, because, as you know, the IRS has a line and worksheets for everything. You may even sustain a penalty!
Here are the seven qualifying factors, all of which must be satisfied. If you’re unsure on any of these points, your best bet is to call the IRS for clarification before you get out the aspirin and start your tax return!
1.You may use the 1040EZ tax form only if your filing status is ’single’ or ‘married, filing jointly’.
2.You must have no dependents aside from you and/or your spouse, and no other exemptions, such as blind or over 65.
3.Your taxable income cannot exceed $50,000 and your taxable interest income, if any, must be less than $400.
4.You cannot use the 1040EZ tax form if you want to itemize your deductions. You must use the standard deduction.
5.You must not have any adjustments to your income, such as alimony or IRA deduction credits.
6.You must use the IRS tax tables at the back of the booklet to calculate your taxes.
7.You may claim the EIC (Earned Income Credit), assuming you qualify, but cannot claim any other tax credits.
If you fulfill all of these seven qualifying criteria, congratulations! You’re one of the lucky ones. You can use the 1040EZ tax form.
Otherwise, you need to use either the 1040 or 1040A tax forms. Then, it’s time to get that aspirin handy and settle down with the tax booklet for some heavy reading!
On the other hand, once you’ve muddled through your federal return, your state tax return is more like comic relief. Why do the state tax return forms seem so simple and non-threatening? You get the distinct feeling that you can get the job done quickly and accurately, without downing a couple of aspirin or sobbing throughout the process.
For one thing, the booklet for the state tax return is about half the size of the IRS instruction booklet and, to my way of thinking, seems to be written in language that more closely resembles English.
You barely need to take more than a cursory look at the state tax return booklet, because the state tax form contains most of the explanatory information you need, line by line. You plug in income amounts, transfer some figures from lines such-and-such from your federal return, enter your standard deduction, which in my state is conveniently provided on the back of the filing form, then subtract this from that and you’re done! A relative piece of cake.
However, before you sit down at your desk to begin the tax return filing process, there are a few caveats you should be aware of before you begin. In years past, if your income fell below a certain level, you could file both your federal and state tax returns at no cost.
Today, the trend is for online tax preparers to do your federal return for free, but attach a charge for the state tax preparation, with rates ranging from about $8-15. The fees for the state filing don’t seem justified, since it’s the easier task.
There must be federal laws stipulating that free federal filings must be available for people in lower income brackets, but no such provisions regarding the states.
Be aware that if you file your federal return electronically online and don’t complete and e-file your state taxes at the same time, you lose the option to e-file with that tax preparation service at a later time.
This happened to me a couple of years ago. It was late at night by the time I was done with the federal part. Anxious to get that federal refund in the works ASAP, I e-filed before hanging it up for the night.
The next morning, I was electronically advised that both must be filed at the same time. This proved to be a small hassle, preparing the state tax return manually and mailing it via snail mail. So, the moral to the story is to do all at once.
Because the dollar amount of state tax refunds are usually nothing to write home about, and the preparation is simple, you might consider saving a few bucks by filling out your state tax return yourself, as soon as you’re done with the feds and sending it through the mail.
In any case, filing early is the key. Most states will get a check to you in about 4 weeks, perhaps less. Why cannot the IRS be more like the states?
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