What is The New IRS 1040 Form?
The new Form 1040 is different from the old one. This new draft may seem confusing, but we are going to help you understand it. Here are the five things all Americans should know about the new IRS Form 1040.
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The New 1040 Form is the Size of a Postcard
One of the main promises Donald Trump made during the 2016 presidential campaign is he wanted to change the tax code to make it simpler. He said that he wanted the average American to be able to file their taxes on something the size of a postcard.
This promise has been somewhat satisfied as Form 1040 is indeed about the size of the average postcard.
Form 1040 now has just 23 lines, which is less than the 79 lines we are all used to. The front of the card continues the relevant identifying information for each taxpayer, with the tax calculations performed on the back.
There are Six New Schedules for the Form 1040
The average American will find that filing the new Form 1040 will make filing taxes simpler. For Americans who have more complex tax affairs, this is far from true.
As well as the schedules that exist today, the IRS is bringing in six new schedules alongside them. These include Schedule A for any itemized deductions and Schedule C for self-employed Americans. But there are six new ones that may also need to be used.
To differentiate them, these new schedules are numbered, rather than lettered. Here’s a quick rundown of what they are.
Schedule 1 – This is for additional sources of income that wouldn’t be included on a W-2. It can also be used for any income adjustments, student loan interest, and contributions to an IRA fund.
Schedule 2 – This is for taxpayers who have other types of taxes, such as a child’s unearned income.
Schedule 3 – Designed for nonrefundable tax credits.
Schedule 4 – Taxpayers will use this to add up specific taxes, such as any uncollected social security, self-employment tax, and Medicare taxes.
Schedule 5 – The point of this schedule is to add up any tax payments. For example, estimated tax payments or taxes paid with an extension.
Schedule 6 – Anyone who wants to add a third-party designee would use this. Americans who discuss tax returns through a third-party with the IRS directly would use this.
So even though Form 1040 is smaller, the content has really been transferred to a range of other schedules. Anyone with a simple Form 1040 will benefit, but anything else will require even more paperwork.
Form 1040-EZ and Form 1040-A No Longer Exist
Before the new Form 1040, the IRS also had the EZ and A variations of the 1040. So that explains why there are six brand new schedules because all this content had to go somewhere.
The ordinary 1040 was complex, which is why the short form 1040-A came into being. The EZ form was designed for Americans who have extremely simple tax affairs. So now these have been morphed into the six new schedules. The information is the same, but the forms have changed.
Every American will now use Form 1040. Complex tax affairs will require the relevant schedules to be attached to the new 1040.
Some Aspects of Form 1040 are Gone
So, we’ve established that Form 1040 isn’t necessarily as simple as it seems. But a few of the things you saw on your last Form 1040 are gone entirely. This is because of the Tax Cuts and Jobs Act, which completely overhauled the tax system.
This is where things get difficult to understand, but we’ve included some examples of some of the things you’ll no longer see:
- Deductions for alimony.
- Personal exemptions.
- Any miscellaneous deductions.
- Moving expenses deductions.
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