The New Simplified 1040 Tax Form
2018 Tax Cut and Jobs Act brought sweeping changes to how individuals handle their taxes in the United States. Most notably, several versions of the 1040 tax form have been consolidated into one simpler version that all taxpayers can use. This may help taxpayers make a determination on which form to use but there remains the question of which schedules to file. The new form requires taxpayers fill out additional schedules that accompany their 1040.
Former Versions of the 1040 Tax Form
Previously, there were three versions of the 1040 form. The standard form was the most complicated version. The 1040-A version was considered the short form, but you could only use it if you met certain conditions. For example, you couldn’t use the 1040-A if you wanted to itemize deductions, if you owned a business, or if your taxable income exceeded $100,000.
The 1040-EZ was even simpler since it was designed for either single or joint filers without dependents.
The newly released 1040 form is intended to simplify the standard filing process for all households. However, you still need to fill out additional schedules if you have income from certain sources (such as capital gains) or if you want to claim particular deductions and/or credits.
If you’ve previously used the 1040-A or 1040-EZ forms to file your taxes, you’re no longer able to do so and instead need to switch to the newly designed standard 1040 form.
You can find more on the previous versions here
Major Changes to the 1040 Form
There are some changes to the 1040 form that could make part of the filing process easier. There were a few items deleted, allowing for simpler filing for some taxpayers. The four major deletions are the personal exemption, the alimony deduction, miscellaneous deductions, and moving expense deductions.
That may seem like a lot of deduction opportunities to eliminate, but these may be balanced out for many taxpayers with a large jump in the standard deduction. Single taxpayers now get a $12,000 standard deduction compared to the previous $6,500. For married taxpayers filing jointly, their standard deduction will be $24,000 rather than $13,000.
If you don’t normally claim many additional deductions, you could end up benefitting from this change in terms of your tax liability (or return, if you qualify for one). Even if you do typically claim one or more of the existing deductions, you could still potentially lessen your tax liability.
Questions on the New 1040 Form
The redesigned 1040 form from the IRS is only half a page long on two sides. The first part covers your personal information. You’ll need to select your filing status: single, married filing jointly, married filing separately, head of household, or qualifying widow(er). You’ll then need your name, social security number and contact information (and the same for your spouse if filing jointly). Additionally you’ll need information on your dependents, such as their first and last name, social security number and relationship to you.
From there, the second part, page two of the 1040 form, will calculate your income information and help determine whether you can expect a refund or owe taxes. You’ll add all of your income from your W-2, plus other taxable income sources like taxable interest and ordinary dividends. Then subtract your deductions and credits to determine your refund or amount owed.
After that, you can add your signature (and your spouse’s, if applicable) along with the date. If you are filing electronically your prior year AGI will typically be used to sign the filing.
When to Use Schedules with Your 1040 Form
There are six additional schedule forms you may need to complete in addition to your 1040 form if certain situations apply to you. Here’s a quick breakdown of each:
This schedule covers additional income and deductions not included on the 1040 form. The form is now divided into 2 parts. The first part is for additional income like alimony, taxable refunds, capital gains, winnings from prizes/gambling as well as unemployment. The second part is for adjustments to income like educator expenses, qualified self employed retirement plans, self employed health insurance deductions, IRA deductions, student loan interest deductions and other deductions. Many require additional forms be attached. You can also use Schedule 1 for deductions such as self-employment tax. Refer to the 1040, Schedule 1 instructions for more information, before you complete your return.
You’ll need to fill out Schedule 2 if you owe an alternative minimum tax or if you have to make payment for an excess advance premium tax credit.
If you want to claim a nonrefundable credit besides the dependent tax credits, you’ll need to complete Schedule 3. This includes things like the educational and foreign tax credits.
This schedule is intended for people who owe other taxes. This includes things like self-employment tax, household employment, or taxes on qualified retirement plans.
This is for both a few different refundable credits as well as other payments. You can use it to claim additional refundable credits, but it doesn't include the earned income credit, the American opportunity credit, or child tax credits. You can also make other payments, like an amount paid while requesting a filing extension or excessive social security tax withheld.
You’ll need this form if you have a foreign address to report to the IRS or if you have a third-party designee besides your paid preparer.
How the New 1040 Form Impacts Tax Software
If you typically use E-file.com to prepare your tax return, you may be wondering what this change means for you. The changes for the 1040 will be incorporated into your tax preparation experience, so you may not even notice a difference in the questions you’re asked by your chosen tax software. The outcomes, however, will likely differ, especially considering the changes in personal exemptions and standard deductions.
Also, remember that the updates to the 1040 form only apply to your federal tax returns. You still need to file with your state as well. Those forms can vary depending on where you live.
Regardless of whether or not you think the new form is simpler than the older version(s), you can ensure a smooth filing by utilizing E-file.com’s quick, convenient, and secure tax software.