What Form 1040A (2020) Is For
Form 1040A was a simplified version of an individual tax return used in earlier tax years. By 2020, taxpayers were required to use Form 1040, but many still sought Form 1040A because it had previously helped individuals report income and claim tax credits. For the 2020 tax year, taxpayers filed a tax return to report income, calculate taxable income, and claim credits, such as the Child Tax Credit, Additional Child Tax Credit, Earned Income Tax Credit, and education tax credits. The form also allowed families to report dependent care expenses, student loan interest, and other adjustments that affected tax liability.
The form applies to income such as wages, dividends, pensions, annuities, unemployment compensation, Social Security benefits, and capital gains distributions. It helped taxpayers calculate adjusted gross income and determine whether to itemize deductions or use the standard deduction. Families filing a joint return, also known as married filing jointly, need to consider dependents, filing status, and income types to complete their return accurately for the tax year.
For a detailed breakdown of filing requirements, eligibility rules, and step-by-step instructions, see our comprehensive Form 1040A Child Tax Credit (2020): A Complete Guide.
When You’d Use Form 1040A
Although Form 1040A was no longer used for the 2020 tax year, the situations requiring a tax return remained unchanged. Taxpayers filed when income exceeded the standard deduction, when they had taxes withheld, or when they needed to claim refundable credits. Individuals who wanted to claim the Child Tax Credit, Additional Child Tax Credit, or Earned Income Tax Credit were required to file a tax return even if their income was low.
Taxpayers also needed to file when they received Alaska Permanent Fund Dividends, unemployment compensation, or interest and dividend income. Filing was necessary when dependent care expenses, tuition payments, IRA contributions, or educator expenses applied. Taxpayers who needed to amend a previously filed return used Form 1040-X to correct income, dependents, deductions, or credits. Late filing was allowed, although taxpayers who owed taxes were charged interest. When refunds were due, the IRS did not penalize late filing.
Key Rules or Details for the 2020 Tax Year
The 2020 tax season required taxpayers to calculate their adjusted gross income (AGI) accurately, as AGI determined eligibility for several credits, including the education tax credit, the income tax credit, and the Child Tax Credit. Income included wages, salaries, tips, capital gains distributions, Alaska Permanent Fund Dividends, unemployment compensation, pensions, annuities, and certain S corporation distributions.
Families needed a valid Social Security number for each child, and each dependent had to meet residency and relationship rules to qualify for the credit. Taxpayers could itemize deductions or take the standard deduction, and they needed to decide whether reporting assets, dividends, estate distributions, or IRA contributions would affect their total tax liability or reduce the tax bill through a refundable or nonrefundable tax credit.
For complete details on wage reporting, withholdings, and unemployment tax filings, see our guide for Individual Tax Forms.
Step-by-Step (High Level)
Step 1: Gather Required Information
Taxpayers needed several items to complete the return:
- Each dependent’s full legal name and Social Security number match Social Security Administration records
- All income forms for wages, dividends, pensions, annuities, unemployment compensation, and capital gains distributions
- Records of tuition payments, student loan interest, dependent care expenses, educator expenses, and IRA contributions
- Documents supporting eligibility for the Child Tax Credit, Earned Income Tax Credit, and Additional Child Tax Credit
Step 2: Determine Filing Status
Taxpayers selected the correct filing status:
- Single
- Married filing jointly
- Married filing separately
- Head of household
- Qualifying widow or widower
The choice of filing status affected deductions, credit eligibility, and tax liability.
Step 3: Report Income
Taxpayers reported all income for the tax year, including wages, salaries, tips, dividends, pensions, unemployment compensation, and income from an S corporation or partnership.
Step 4: Apply Adjustments
Adjustments that reduced income included:
- Student loan interest
- Educator expenses
- IRA contributions
- Specific adjustments related to self-employment
Step 5: Calculate Adjusted Gross Income
Adjusted gross income determines eligibility for credits such as the education tax credit, the Earned Income Tax Credit, and the Child Tax Credit. AGI also influenced whether taxpayers should itemize deductions.
Step 6: Claim Deductions and Credits
Taxpayers chose the standard deduction unless itemizing provided a greater benefit. Credits available included:
- Child Tax Credit
- Additional Child Tax Credit
- Earned Income Tax Credit
- Education tax credits
- Income tax credit for qualifying low-income individuals
Step 7: Determine Tax Liability
The form calculated taxable income and compared it against IRS tax tables. Credits and payments reduced the total tax bill. A refund was issued when refundable credits and payments exceeded tax liability.
Step 8: File the Return
Taxpayers filed electronically or by mail. The IRS used a locked padlock icon on secure online pages to indicate that an encrypted submission was required for forms and personal information.
Common Mistakes and How to Avoid Them
- A taxpayer enters an incorrect Social Security number for themselves or a dependent, and can avoid this by checking every SSN against official records before filing.
- A taxpayer claims a dependent who does not meet residency or relationship rules, and can prevent delays by confirming eligibility and maintaining documents that prove the relationship and the number of days lived together.
- A taxpayer who miscalculates adjustments, such as student loan interest or educator expenses, can avoid incorrect AGI results by following the worksheet instructions carefully.
- A taxpayer who fails to report wages, tips, dividends, pensions, or other income can prevent IRS notices by reviewing all year-end forms and comparing them with their return.
- A taxpayer uses the wrong filing status or applies the Child Tax Credit or Earned Income Tax Credit incorrectly, and can avoid errors by reviewing eligibility rules and coordinating dependent claims in shared-custody situations.
What Happens After You File
After taxpayers file a 2020 tax return, the IRS verifies income, dependents, and credits such as the Additional Child Tax Credit or Earned Income Tax Credit. The agency matched reported wages, interest, dividends, and adjustments to ensure the correct tax figure and reviewed forms using secure pages often marked with a locked padlock icon.
Most refunds are issued within a few weeks; however, claims involving dependents or refundable credits may require additional time. If the IRS found a discrepancy in reported income or dependents, taxpayers received a notice requesting documents or instructions to contact the agency. Those who owed taxes were required to pay promptly to avoid additional interest or penalties.
FAQs
Who qualifies for the Child Tax Credit for 2020?
A qualifying child must be under the age of 17, have a valid Social Security number, and meet all residency and dependency requirements.
Can taxpayers claim both the Child Tax Credit and the Earned Income Tax Credit?
Yes, taxpayers who meet the eligibility requirements for both credits can claim them on the same tax return.
What if two taxpayers claim the same dependent?
The IRS reviewed both returns and requested documentation to determine which taxpayer was entitled to claim the dependent.
Does unemployment compensation affect the Child Tax Credit?
Unemployment compensation increased adjusted gross income, which could affect eligibility for certain credits, including the Additional Child Tax Credit.
Can a taxpayer amend a 2020 return to add a dependent?
Yes, a taxpayer could file Form 1040-X to amend a return and include proof showing the dependent met all eligibility requirements.
