Not everyone happy about the new 1040
Well, a number of you don’t agree with my blissful assessment that the new IRS Form 1040 is an improvement. (If you missed the column, email me at readers@juliejason.com.)
For the 25 million (out of 150 million) taxpayers whose taxes are more complicated than a simple 1040A or 1040EZ can handle, the new Form 1040 will take some time to get used to. Next year’s return will be a breeze — it’s just the first time that will take some adjusting, partly because there are six new schedules. However, not all of them will apply to you. I’ll go through them shortly.
Because of the use of schedules, one reader (M.B.) believes the newly redesigned Form 1040 is merely “shuffling the deck, and not simplifying anything.” He says, “Most all the line items which used to be on Form 1040 have been shifted to the new Schedule 1.”
Schedule 1 is for taxpayers who have “additional income” such as alimony (line 11); business income (line 12); capital gains (line 13); rental real estate, partnerships, S corporations (line 14); or unemployment compensation (line 19).
Schedule 1 also captures adjustments to income such as educator expenses (line 23); health savings account deductions (line 25); self-employed SEP, SIMPLE plans (line 28); IRA deductions (line 32); and student loan interest deductions (line 33).
Schedule 2 covers alternative minimum taxes. Schedule 3 is about nonrefundable credits (but not the child tax credit). Schedule 4 covers other taxes, such as selfemployment and additional taxes on IRAs.
Schedule 5 will be used by anyone who pays estimated taxes or other tax payments, such as those that are sent in for an extension. Schedule 6 is less likely to be used (foreign addresses or a third-party designee other than a paid preparer.)
For more information on the schedules, read “About Form 1040, U.S. Individual Income Tax Return” at irs.gov/forms-pubs/ about-form-1040.
Here are some more observations:
P.J. says: “Overall, the IRS could have used some help from a good form developer to make the Form 1040 much more userfriendly. It could have been kept to a simple two-page form without the need for new Schedules 1 through [6] . ... Just making the form shorter was not an improvement. And the font used is too small to be read easily, especially by older taxpayers.”
P.J. would like to see the IRS make significant improvements next year.
P.J. commented that he could not use the IRS’ PDF version of the forms to insert “QCD” on the form when using a requirement minimum distribution for a qualified charitable distribution. P.J., check again. It is available on the PDF version (perhaps updated since you tried).
I suppose the IRS should be aware of a few more comments:
J.J. said: “I’m not sure why you are so excited about the new 1040 ... I hate it! As far as I’m concerned, it makes for more work, not less, as the information required, previously included on one form, is now spread over several new schedules.”
In the end, if you do your return electronically, either using a software package or free online tax programs through the IRS website — or if you use a CPA — you won’t be spending any more (or less) time to prepare your taxes this year.
I’d like to thank all of my readers who reached out to me with comments — I received many more than space allowed. I’ll address questions in later columns. Let’s keep the dialogue going.
On another topic: If you were nominated for the 401(k) Champion Award (nomination deadline: 2/15/19), be sure to submit your online application before 3/1/2019 at juliejason.com/award. Three independent judges will choose three 401(k) participants to receive $1,000 each. Award winners will be announced in April.
Julie Jason, JD, LLM, a personal money manager (Jackson, Grant of Stamford) and author, welcomes your questions/comments (readers@juliejason.com). Her awards include the 2018 Clarion Award, symbolizing excellence in clear, concise communications. Her latest book, a curated collection of Julie’s columns, is “Retire Securely: Insights on Money Management From an Award-Winning Financial Columnist.” To hear Julie speak, visit juliejason.com/events.