The IRS released a new draft of Form 1040, U.S. Individual Income Tax Return, for the 2019 tax year that reduces the schedules in the 2018 version. The IRS also released a draft a new Form 1040-SR, U.S. Tax Return for Seniors, for taxpayers who are at least 65 years old.
The new Form 1040 is the second major overhaul of the widely used form in as many years. However, the changes for 2019 are much less drastic than they were for 2018.
2018 Form 1040 as Postcard-Sized Return
The 2018 Form 1040 was revised from the longstanding version to meet the Republican goal of a “postcard size” return. The form was reduced to just 23 lines, compared with 79 lines in prior tax years.
The result was a smaller form that consolidated Forms 1040, 1040A, and Form 1040EZ. The shortened form also reflected many legislative changes that took effect in 2018, such as the higher standard deduction, and the elimination of personal exemptions and other deductions.
2018 Form 1040 Included Six Schedules
While the 2018 Form 1040 was shorter, it also included six new schedules. These new schedules were just parts of the old Form 1040 separated out into new forms:
- Schedule 1 – Additional income and adjustments to gross income (“above-the-line deductions”);
- Schedule 2 – Taxes such as alternative minimum tax and repayment of advanced premium tax credits;
- Schedule 3 – Nonrefundable credits;
- Schedule 4 – Other taxes, such as self-employment tax or nanny taxes;
- Schedule 5 – Refundable credits; and
- Schedule 6 – Foreign addresses and third-party designees.
Cool Reception for 2018’s 1040
The 2018 version fell flat with both taxpayers and tax professionals, primary because of the six schedules. While most taxpayers use tax preparation software and file electronic returns, many use the paper returns to review with their tax advisor. Thus, many users found the 2018 version of 1040 more confusing because they had to work back-and-forth between all the different schedules, instead of having all the information in one place.
New Draft 2019 Form 1040
The draft 2019 Form 1040 reduces the number of schedules from six to three. The new form draws the information from Schedule 6 into the main form and combines other schedules.
The three draft schedules for the 2019 Form 1040 are:
- Draft Schedule 1 – Additional income and adjustments to gross income (above-the-line deductions) (this schedule mainly just renumbers some of the lines on the 2018 Schedule 1);
- Draft Schedule 2 – Additional taxes (this schedule combines 2018 Schedules 2 and 4); and
- Draft Schedule 3 – Additional credits and payments (this schedule combines 2018 Schedules 3 and 5).
The resulting draft 2019 Form 1040 is therefore slightly longer than the 2018 version—no longer “postcard size,” but still shorter than the original 1040. Where the 2018 Form 1040 had only taxpayer information on the first page, the first page draft 2019 Form 1040 now includes the reporting and calculation of taxable income, while the second page includes the calculation of tax, including credits.
Draft 2019 Form 1040SR
The IRS also released a draft of new Form 1040SR for 2019, as required by the Bipartisan Budget Act of 2018 (P.L. 115-123). This is intended to be a simpler for individuals who are age 65 or older by the end of the year.
The draft Form 1040SR is almost identical to the draft Form 1040, but it has larger font sizes and no color contrasts to make it easier to read. In addition, page 1 includes a chart of the standard deduction and additional standard deduction amounts for taxpayers over 65 years old or blind.
Unfortunately, seniors with more complicated situations may still need to use the three schedules of 1040 to complete their returns.
By John Buchanan LL.M, J.D.