The Federal income tax forms are developed in a way that suits the social and economic conditions of all the federal tax payers. This means that the forms put into consideration the different aspects of life evident in the lives of the taxpayers. These aspects of life include but not limited to marriage, education, income earned or generated, age, health and social schemes, business and overall functionality of the economy. In this regard, the individual tax payers’ decisions on the forms to choose when it comes to payment of federal taxes are greatly influenced by these life aspects in the context of the requirement to pay federal taxes.
The IRS has published different forms for the purposes of tax payment. The choice on what forms to use for specific groups of the economy depends on the specific social status of the taxpayer(s). For instance, in the case of Harold and Sarah Peterson, the couple is married and further has a daughter. Given the kevel of their income, they absolutely fall under a given tax bracket. The form 1040 is considered one of the most important tax payments forms published by the IRS. This particular form has got subsequent two other simpler forms under it. These are the 1040EZ and 1040A forms. The ease in their use constitutes the fact that they are not meant for any one tax payer who is married or one who has children (Dodge, 1995).
Harold and Sarah Peterson form of tax payment is the form 1040. This is quite a long form that consists of a greater context of activities and further considerations in the evaluation of the tax that a given tax payer is required to pay under the federal income tax model. This couple sets at this form (1040) and not the other simpler forms because the simpler forms do not meet their social and economic status in their context (Fair Tax Act, 2007). The fact that the couple is married and a further consideration that they have a child makes them settles for the form 1040. On the same note, Harold and Sarah Peterson had itemized deductions that needed to be made in the evaluation of the tax that the couple is required to pay. For this reason they could not at any one point use the simple forms because they do not provide for the itemized deductions and they further do not consider the case where the tax payer has got a child or children to take care of.
The federal tax payer in this consideration (Harold and Sarah Peterson) had also sold their house and in addition paid for a day care service for their daughter. The sale of the premise attracted a tax to the government, while the payments to the day care centre attracted a deduction to the overall tax liability. In a bid to lower the tax liability set to be met by the couple, the form they chose takes into account several aspects of their daily lives subject to their responsibility to pay their federal taxes (Shaviro, 2006). The couple works at different companies, and it is noted that both contribute to their respective company’s 401K Plan. The implication of this to the subject to the particular form they choose is that, since they are married, the tax filing is done jointly. In the case of Harold and Sarah Peterson, both are earning income from their respective company. This form provides for joint filing if the couple in question based on federal taxes is married. This could still have been the case even if the couple is married and only one of them had income. In this case, both are earning income, and although they work in different companies, this form they have chosen allows for their incomes to be taxed on lump sum (both added) (Shaviro, 2006).
How the Federal Income Tax Return Forms Work
The filing of individual tax return requires that one chooses which federal income tax return form to use subject to the situation that affects an individual, as already outlined above. The use of e-file has also grown to a greater extent in the same tax payment procedure. The IRS requires that individuals choose what forms to use in a bid to minimize the cost incurred in tax return collection. According to the IRS requirements, the form to use is dictated by set conditions that constitute the functionality of the federal income tax return filing.
There are three forms used in the federal income tax return filing, which include 1040EZ, 1040A and 1040. The first two are simpler models of the 1040 form. They do not include complex situations that alter what tax returns are to be filed. For example, the 1040A form is used to file tax returns for persons who earn less than $100,000 taxable income. It also considers cases where there is a distribution of capital gains alongside tax credit claims. Income adjustments are also considered under this form but more specifically in the context of loan interest to students and contributions to IRA (Watson, 2005).
For the 1040EZ form, is meant for persons who as well earn less than $100,000 taxable income and the filing status applicable is that of singles or where the filing is joint for the married couples. The married couple is further subject to another condition that one or both should not be blind and both are less than 65 years of age. The taxpayers who cannot use the above discussed two forms earn a taxable income of over $100,000. They are also subject to make claims for itemized deductions alongside having a child or children in this regard, they are required to use the 1040 form to file their tax returns (Watson, 2005). This form also encompasses income from self-employment activities as well as in come from property tax.
The functionality of the above forms covers the cross-sectional differences observed in the economy. The government spending is financed by taxes and the effectiveness of the procedure through which the tax returns are filed further determines the effectiveness of the IRS in collecting federal taxes. The consideration made by each form is crucial to the welfare of the taxpayer. Each form considers the situational aspect of the taxpayers in line of their ability to pay. It can be concluded that the functionality of all the forms presented above is tailored towards lowering the tax liability to the taxpayer.
Dodge, M., & Fleming, J. (1995). Federal Income Tax: Doctrine, Structure and Policy.
Charlottesville, Va.: Lexis Law Publishing, 1999.
Fair Tax Act. (2007). Americans for Fair Taxation: Weekly Feature.
Shaviro, D. & Bankman, J. (2006). Federal Income Taxation. New York: Aspen Law and
Analysts, World Tax Daily. (2006). The Global Forum on Taxation’s 2006 Progress Report: An
Overview” May 29, 2006, Lexis 2006 WTD 109-6, 42 Tax Notes Int’l 869.
Watson, C. & Billman, B. (2005). Federal Tax Practice and Procedure. St. Paul, MN: