By Eric Soranno
Recently, the IRS and Treasury Department rolled out their first draft of the new “postcard” Form 1040. At first glance, the new postcard 1040 appears to be quite a bit smaller, in physical size, than the 2017 form. The amount of lines has also been decreased from 79 to 23.
Treasury Secretary Steven Mnuchin stated that: “The new, postcard-size Form 1040 is designed to simplify and expedite filing tax returns, providing much-needed relief to hardworking taxpayers.” But do the fewer number of lines make the form less complicated?
Let’s start with the front of the postcard 1040. Here we have room for the taxpayer’s personal information including name, address, dependents, etc., as well as the taxpayer’s signature. Seems pretty simple and logical as there isn’t much change, but if you look closer, there are only two lines available for you to include your dependents. What if the taxpayer has more than two? You may need to add another schedule to your return.
If you move on to the back of the postcard 1040, you’ll see that the 37 income and adjustment lines have been condensed into seven, but if you look more closely at line 6, you’ll see an instruction to “Attach Schedule 1.” Items such as partnership income and capital gains are reported under “Additional income and adjustments” and require this separate schedule on top of schedules that are already required.
As you move down the postcard 1040 you’ll continue to see the words “Attach Schedule (X)” throughout. You’ll also notice that estimated tax payments made throughout the year require an entirely new schedule, whereas before it appeared just as a line item.
So did Form 1040 get easier, or did it just get reduced in length to become easier to read? Now, we haven’t seen what these schedules are going to look like, but I would assume that they’re going to have similar line items to what is currently on the 2017 Form 1040.
House Speaker Paul Ryan said that: “The lines used most frequently by Americans are all on the back so that the lion’s share of taxpayers won’t need anything beyond this form.” This can be seen as a benefit to most taxpayers, but wasn’t this what Form 1040A already did? Although the Form 1040 was edited to about one page instead of two, did it really get less confusing with the addition of at least six new schedules? Only time will tell.