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Form 1040 Facing First Major Redesign in Decades

June 28, 2018

 

The familiar Form 1040 form for individual income taxes is getting a major face lift for 2018. It is getting shorter, believe it or not, although possible at the cost of increased overall complexity. The new form appears to be designed to deliver on President Trump's and the Republican Party's promise to reduce tax filing to the size of a postcard.  

 

The new Form 1040 will be two half pages or one whole page, while the lines removed will be shifted to six new schedules. The new schedules will be for additional income and adjustments (such as business income, alimony received, capital gains or losses, and adjustments including educator expenses and student loan interest expense), tax (including child’s unearned income tax, the alternative minimum tax, and any excess premium tax credit), nonrefundable credits (including the foreign tax credit, the credit for child and dependent child care, the education credit, and the residential energy credit), other taxes (including household employment taxes, the health care individual responsibility payment, the net investment income tax, and the additional Medicare tax), other payments and refundable credits (including estimated tax payments, the net premium tax credit, and amounts paid with an extension request), and foreign address and third party designee (provides taxpayers who have a foreign address a place to list their country, province, and postal code and provides all taxpayers with a place to list information for a third-party designee who can discuss the return with the IRS). 

 

Ironically, more than ninety percent of taxpayers file their tax returns electronically, which seems to make the idea of a postcard sized Form 1040 somewhat superfluous. Still, politics is usually about perceptions of that of reality, and the words smithing coming with the announcement of the new 2018 Form 1040 will likely be epic. 

 

Some European tax agencies strive for simplicity be pre-populating tax forms with previously electronically filed wage and withholding rather than redesigning the forms. This has gained some traction among political pundits, although how pre-populating data on forms that is still the responsibility of th US taxpayer saves time is not entirely clear. 

 

Keep watching our sites and blogs for updates. Questions? Email us at inquriy@njcpaccounting.com.

 

 

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