1040A Form
As a business owner, understanding IRS tax forms is essential for filing correctly and maximizing tax benefits. The 1040A form was a simplified version of the U.S. Individual Income Tax Return, designed for taxpayers with moderate income and fewer deductions. However, the IRS discontinued Form 1040A in 2018, replacing it with a streamlined Form 1040.
Now, all taxpayers—including business owners, freelancers, and investors—must file Form 1040, which consolidates features of the previous 1040, 1040A, and 1040EZ forms.
Definition of Form 1040A
Form 1040A was a simplified individual tax return form for taxpayers who:
✔ Earned less than $100,000 in income.
✔ Did not itemize deductions (standard deduction only).
✔ Had limited tax credits and adjustments (education credits, child tax credit, IRA deductions).
It was a middle option between Form 1040EZ (basic returns) and Form 1040 (detailed returns). However, Form 1040A is no longer in use—all taxpayers now file Form 1040, which accommodates all income levels and tax situations.
Explanation: what happened to Form 1040A?
Before 2018, taxpayers had three primary tax return options:
✔ Form 1040EZ – For simple tax situations (single filers, no dependents).
✔ Form 1040A – For moderate-income taxpayers with basic deductions and credits.
✔ Form 1040 – For all tax situations, including self-employment and investments.
In 2018, the IRS eliminated Form 1040A and Form 1040EZ, replacing them with a single, redesigned Form 1040.
Now, all taxpayers must use Form 1040, with additional schedules for complex tax situations (business income, capital gains, itemized deductions).
Real-life example: Transition from 1040A to 1040
Scenario: A business owner filing taxes
Before 2018, a part-time consultant earning $75,000 could file Form 1040A if they had no self-employment income.
✔ Reported salary and IRA deductions.
✔ Took standard deduction instead of itemizing.
✔ Used limited tax credits (education credits, child tax credit).
After 2018, the consultant must file Form 1040, which now covers all tax situations and allows for more deductions and credits.
Why is the elimination of Form 1040A important for business owners?
1. Simplifies tax filing with a single Form 1040
The IRS replaced Form 1040A with Form 1040 to create one unified tax return for all taxpayers.
✔ No confusion over which form to use.
✔ More flexible tax reporting for different income types.
Example: A small business owner with a salary and rental income can now report both on Form 1040 without switching forms.
2. Allows more deductions and tax benefits
Form 1040 accommodates a wider range of deductions and credits than 1040A did, benefiting taxpayers with more complex financial situations.
✔ Self-employment deductions (home office, business expenses).
✔ Investment income reporting (capital gains, dividends).
✔ Itemized deductions for larger tax savings.
Example: A freelancer who previously filed 1040A with limited deductions can now claim more business expenses on Form 1040, reducing taxable income.
3. Enables more flexibility for business and investment income
Previously, Form 1040A did not allow for:
❌ Self-employment income (Schedule C required Form 1040).
❌ Capital gains reporting (Schedule D required Form 1040).
❌ Rental property income (Schedule E required Form 1040).
With the new Form 1040, all business, investment, and rental income can be reported on one return using additional schedules.
Example: A real estate investor who previously had to file Form 1040 instead of 1040A can now easily report rental property income on Form 1040 with Schedule E.
Form 1040 vs. 1040A: What’s the difference?
| Feature | Form 1040A (Discontinued) | Form 1040 (Current) |
| Available for tax years | Before 2018 | 2018 and later |
| Income limit | $100,000 or less | No income limit |
| Self-employment income? | ❌ No | ✅ Yes (Schedule C) |
| Itemized deductions? | ❌ No | ✅ Yes (Schedule A) |
| Capital gains reporting? | ❌ No | ✅ Yes (Schedule D) |
| Best for… | Simple tax situations | All taxpayers, including business owners |
Form 1040 is now required for all taxpayers, simplifying the filing process and allowing for more comprehensive financial reporting.
How to file taxes now without Form 1040A
✔ Use Form 1040 instead – The IRS automatically directs all taxpayers to Form 1040.
✔ Determine if you need additional schedules – Business owners and investors may need Schedule C (business income) or Schedule D (capital gains).
✔ File electronically for faster processing – The IRS recommends e-filing Form 1040 for quicker refunds.
✔ Consider tax software or a CPA – If your income sources are complex, tax professionals or software like TurboTax and QuickBooks can simplify filing.
Example: A consultant previously using 1040A now files Form 1040 with Schedule C to report freelance income.
About CoCountant
With the elimination of Form 1040A, all business owners—whether self-employed, freelancers, or small business owners—must now file Form 1040. But keeping up with tax changes and ensuring accurate reporting can be overwhelming without organized financial records.
At CoCountant, we take bookkeeping off your plate, keeping your books clean, accurate, and always tax-ready—so filing Form 1040 is effortless.
✅ Accurate, up-to-date bookkeeping – Every transaction recorded and categorized, so you’re never scrambling at tax time.
✅ Tax-ready financial statements – Clear, detailed reports that simplify Form 1040 filing and help you claim every deduction.
✅ Seamless income tracking – Ensure your business, freelance, or contractor earnings are properly recorded for Schedule C and other tax forms.
✅ Expert bookkeeping tailored to your business – No more second-guessing deductions or tax reporting—we handle it all.
Form 1040 is now the standard, but tax compliance starts with accurate bookkeeping. Let CoCountant keep your financials in order so tax season is smooth, not stressful.
Need help managing Form 1040 filings or handling 1040A contractors after the 1040A change?