Article Posted on 12/13/2018
THE NEW FORM 1040 – SMALLER BUT NOT EASIER
Pretty soon you will be getting the Income Tax packet from the IRS. In there you will find the new form 1040. Our government promised making the tax process so much simpler that you could put it on a postcard. Well here is how they delivered on their promise.
What they did was shrink the old two page 79 line form to only 23 lines and it can now be folded over into a postcard size form to be mailed. Here are my initial thoughts on the new form:
- The form lists only the following items of income – wages, interest, dividends, IRAs and pensions and social security income. All other sources of income will be reported on a new schedule that they came up with. New Schedule 1.
This means all taxpayers will now need to prepare business schedule C or F first and then have this income flow to New Schedule 1 and then flow to Form 1040.
New Schedule 2 now needs to be filled out to show the amount of gross tax owed by the taxpayer. For those that are self-employed, you then must fill out New Schedule 4 to list the amount of self-employment tax owed (or other taxes).
- If the taxpayer has credits this now goes on New Schedule 5.
- And if you have kids under age 17, they will now need to prepare New Schedule 3 and perhaps New Schedule 5 for the refundable part of this credit.
- The new Section 199A deduction is listed as the last deduction on Form 1040, line 9 right before line 10 – taxable income.
Although Form 1040 is now smaller, it now likely requires at least 4 if not 5 more schedules to be prepared.