Form 1040EZ Tax Year 2016: Compliance Checklist
Year-Specific Context
2016 Form 1040EZ Uniqueness
The 2016 Form 1040EZ incorporates Affordable Care Act health coverage reporting and shared responsibility payment calculations on line 11, requires updated Earned Income Credit thresholds adjusted for inflation, and enforces an extended filing deadline of April 18, 2017, rather than the traditional April 15, due to the District of Columbia Emancipation Day holiday falling on a weekday.
Only single and married filing jointly taxpayers under age 65 with taxable income below $100,000 and no dependents are eligible to file this simplified form. Taxpayers claiming any dependents, regardless of the number, must use Form 1040A or Form 1040 instead.
Year-Specific Programs Applying to 2016 Form 1040EZ
Taxpayers must report their health coverage status or claim coverage exemptions in accordance with ACA requirements. Failure to indicate Full-year coverage or attach Form 8965 for exemptions results in a shared responsibility payment calculation on line 11. The shared responsibility payment is the greater of a flat dollar amount ($695 per adult, $347.50 per child under 18, up to a family maximum of $2,085) or 2.5% of household income above the filing threshold, capped at the national average premium for a bronze-level health plan.
The Earned Income Credit maximum thresholds increased for 2016: $14,880 for single filers with no qualifying children or $20,430 for married filing jointly filers with no qualifying children.
Ten-Step Filing Checklist for Form 1040EZ Tax Year 2016
Step 1: Verify Age and Birth Date Requirements
Confirm that you and your spouse (if filing jointly) were both born after January 1, 1952, meaning you were under age 65 on December 31, 2016, and that neither of you was blind at the end of 2016. If you were born on January 1, 1952, you are considered to be 65 years old at the end of 2016 and cannot use Form 1040EZ.
If either you or your spouse was age 65 or older or blind at year-end, you must use Form 1040A or Form 1040 to claim the higher standard deduction amount available for these circumstances. The age and blindness restrictions exist because Form 1040EZ provides only the basic standard deduction amount and cannot accommodate the additional standard deduction amounts for individuals aged 65 or older or those who are blind.
Step 2: Confirm Filing Status Eligibility
Verify that your filing status is single or married filing jointly as of December 31, 2016. Your marital status on the last day of the year determines your filing status for the entire year. If you are claiming head of household status, qualifying widow(er) with dependent child status, or married filing separately status, you must use Form 1040A or Form 1040 instead of Form 1040EZ.
Additionally, you cannot claim any dependents on Form 1040EZ. If you have any qualifying children, qualifying relatives, or other dependents, you must file Form 1040A or Form 1040 even if you otherwise meet all Form 1040EZ requirements.
Step 3: Validate Income Type and Limits
Confirm that all your income is from wages, salaries, tips shown in box 1 of Form W-2, taxable interest not exceeding $1,500 total, taxable scholarship or fellowship grants reported to you on Form W-2 or Form 1098-T, unemployment compensation reported on Form 1099-G, or Alaska Permanent Fund dividends. If you received more than $1,500 in taxable interest, you must file Form 1040A or Form 1040 with Schedule B attached.
If you have self-employment income, capital gains or losses, business income, rental income, farm income, or any other type of income not specifically permitted on Form 1040EZ, you must use Form 1040A or Form 1040. Your adjusted gross income must be less than $100,000 to use Form 1040EZ.
Step 4: Gather and Verify W-2 and 1099 Forms
Collect Copy B of all Forms W-2 (one from each employer) showing wages, salaries, and tips in box 1, federal income tax withheld in box 2, and verify that your name and Social Security Number match your Social Security card exactly. If any Form W-2 shows incorrect information, such as a misspelled name, a wrong Social Security Number, or incorrect wage amounts, request a corrected Form W-2 from your employer before filing your return.
Employers are required to provide Form W-2 by January 31, 2017. If you have not received your Form W-2 by mid-February, contact your employer and, if necessary, contact the IRS for assistance. Collect all Forms 1099-INT showing taxable interest income and verify that the total does not exceed $1,500.
Step 5: Collect Health Coverage Documentation
Obtain Form 1095-A by early February 2017 if you had Marketplace coverage through the Health Insurance Exchanges. Obtain Form 1095-B or Form 1095-C by early March 2017 showing months of qualifying health coverage for you and your spouse if filing jointly. These forms indicate which months during 2016 you had minimum essential coverage that met the Affordable Care Act requirements. If you lacked coverage for any month in 2016 and do not qualify for a coverage exemption, you must calculate the shared responsibility payment for line 11 of Form 1040EZ.
Coverage exemptions include hardship exemptions, religious conscience exemptions, certain immigration status situations, membership in health care sharing ministries, and short coverage gaps of less than three consecutive months.
Step 6: Determine Dependency and Standard Deduction Status
If someone can claim you or your spouse (if filing jointly) as a dependent on their tax return, even if they choose not actually to claim you, you must complete the worksheet on the back of Form 1040EZ to calculate your limited standard deduction. The worksheet calculates your standard deduction as your earned income plus $350, with a minimum of $1,050 and a maximum of $6,300 for single filers or $12,600 for married filing jointly filers. If no one can claim you or your spouse as a dependent, enter the full standard deduction amount on line 5: $6,300 for single filers or $12,600 for married filing jointly filers. The standard deduction for 2016 also includes the personal exemption amount of $4,050 per person; therefore, the line 5 amount represents the combined standard deduction and personal exemption.
Step 7: Calculate Adjusted Gross Income
Add line 1 showing total wages, salaries, and tips from box 1 of all Forms W-2, line 2 showing total taxable interest not exceeding $1,500 from all Forms 1099-INT, and line 3 showing unemployment compensation from Form 1099-G box one or Alaska Permanent Fund dividends, to determine line 4 adjusted gross income. Verify that your AGI on line 4 is less than $100,000. If your AGI is $100,000 or more, you cannot use Form 1040EZ. You must file Form 1040A or Form 1040 instead. Form 1040EZ does not allow any adjustments to income, such as IRA deduction, student loan interest deduction, or other above-the-line deductions, so your total income equals your adjusted gross income.
Step 8: Report Taxable Income and Claimed Credits
Subtract line 5 (standard deduction and personal exemption combined) from line 4 (adjusted gross income) to calculate line 6 taxable income. If line 5 is larger than line 4, enter zero on line 6. Look up your tax in the 2016 Tax Table using your taxable income from line 6 and your filing status, and enter the tax amount on line 10. On line 8a, you may claim only the Earned Income Credit if your earned income and adjusted gross income are each less than $14,880 for single filers or $20,430 for married filing jointly filers, and you have no qualifying children.
All other credits, including the child tax credit, education credits, retirement savings contributions credit, and premium tax credit, require filing Form 1040A or Form 1040. Enter total federal income tax withheld from all Forms W-2 and Forms 1099 on line 7.
Step 9: Calculate Health Coverage Responsibility Payment
On line 11, check the “Full-year coverage” box only if you and your spouse (if filing jointly) had qualifying health coverage for all 12 months of 2016. Qualifying coverage includes employer-sponsored coverage, government-sponsored coverage such as Medicare or Medicaid, individual market coverage, or specific other minimum essential coverage.
If coverage was absent for any month and you do not qualify for a coverage exemption, you must calculate your shared responsibility payment using the worksheet in Form 8965 instructions and enter the payment amount on line 11. Failure to properly report your health coverage status or calculate the shared responsibility payment if required results in an incomplete return that may be rejected by the IRS or subject to processing delays and follow-up correspondence.
Step 10: Sign, Date, and Prepare for Mailing
Sign and date Form 1040EZ in your own handwriting. If filing a joint return, both spouses must sign the return. Enter your occupation and a daytime phone number where you can be reached. Attach Copy B of all Forms W-2 to the front page of Form 1040EZ using a staple or paper clip. Do not use tape or glue, as these interfere with IRS scanning systems. Do not attach Forms 1095-A, 1095-B, or 1095-C to your return; keep these with your tax records for at least three years.
If you owe tax, make your check or money order payable to “United States Treasury” and write your Social Security Number, daytime phone number, and “2016 Form 1040EZ” on your payment. Mail your complete return to the appropriate IRS address for your state by April 18, 2017, the extended deadline for tax year 2016 due to the District of Columbia Emancipation Day holiday.
Form-Specific Limitations and Restrictions
Credits, Deductions, and Adjustments Prohibited on Form 1040EZ
Only the Earned Income Credit for filers with no qualifying children may be claimed on Form 1040EZ. No other credits are permitted, including child tax credit, additional child tax credit, education credits such as American Opportunity Credit or Lifetime Learning Credit, premium tax credit, retirement savings contributions credit (saver’s credit), adoption credit, foreign tax credit, or any other tax credits.
No adjustments to income may be claimed on Form 1040EZ. Filers with above-the-line deductions such as IRA contributions, student loan interest, educator expenses, health savings account deductions, or self-employment tax must file Form 1040A or Form 1040. No itemized deductions may be claimed; only the standard deduction applies.
Nonresident Alien Restrictions
If you were a nonresident alien at any time during 2016, you may use Form 1040EZ only if your filing status is married filing jointly. You are married to a U.S. citizen or resident alien, and you both elect to treat the nonresident spouse as a resident for the entire year. Otherwise, you must file Form 1040NR or Form 1040NR-EZ per Publication 519 (U.S. Tax Guide for Aliens). Nonresident aliens cannot file Form 1040EZ if filing as single or if they do not make the election to be treated as a resident.
Premium Tax Credit and Health Insurance Marketplace Prohibition
If you claim the premium tax credit for 2016 or if you or a family member received advance premium tax credit payments for health insurance coverage purchased through the Health Insurance Marketplace at any time during 2016, you must file Form 1040 or Form 1040A with Form 8962 attached to reconcile the advance payments with your actual premium tax credit eligibility. Form 1040EZ is not permitted for taxpayers who must file Form 8962.
Line Changes and Updates for Tax Year 2016
Line 11 for health care individual responsibility (shared responsibility payment) received continued emphasis and clarification for 2016. While the ACA shared responsibility payment requirement was introduced in prior years, the 2016 instructions provided enhanced guidance reflecting increased taxpayer awareness and IRS enforcement.
Line 11 requires explicit reporting of either the “Full-year coverage” box checked or calculation of the shared responsibility payment using Form 8965 instructions if coverage is absent for any month and no exemption is claimed. Taxpayers receiving Forms 1095-A, 1095-B, or 1095-C must reference the months of coverage indicated on these forms to complete line 11 accurately.
The personal exemption amount increased from $4,000 in 2015 to $4,050 for 2016. This increase is reflected in the line 5 calculations and worksheet for taxpayers who can be claimed as dependents. The standard deduction amounts remained $6,300 for single filers and $12,600 for married filing jointly filers. The increased personal exemption reduces taxable income for all filers and is automatically incorporated into the line 5 standard deduction and exemption amount.
For professional assistance with your 2016 Form 1040EZ or any tax filing questions, contact our tax experts at (888) 260-9441.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
