It's a "Postcard"...with Lots of Attachments
IRS officially unveiled its draft 2018 Form 1040 today, stating that it will work with the tax community to finalize the form over the summer. The new Form is part of the IRS effort “to streamline the Form 1040 into a shorter, simpler form for the 2019 tax season.” The IRS announcement—directed at tax professionals—stated, “The new 1040 – about half the size of the current version -- would replace the current Form 1040 as well as the Form 1040A and the Form 1040EZ.” The announcement continued that the new Form 1040 uses a “building block” approach, in which the tax return is reduced to a simple form, which can be supplemented with additional schedules if needed. Taxpayers with straightforward tax situations, the IRS says, would only need to file the new 1040 with no additional schedules. It appears, however, that most taxpayers will need to file at least one of six new schedules, to report information that used to be captured on the Form 1040 itself.
Note that the new Qualified Business Income Deduction appears on line 9 of page 2.
IRS Seeking Comments
IRS is asking tax professionals to submit comments regarding the draft form to WI.1040.Comments@IRS.gov.
Shortly after posting the draft 1040, IRS also posted the drafts of the six new schedules (5 of which are referenced in the draft 1040). These schedules are detailed as follows:
- Schedule 1, Additional Income and Adjustments to Income
- Schedule 2, Tax
- Schedule 3, Nonrefundable Credits
- Schedule 4, Other Taxes
- Schedule 5, Other Payments and Refundable Credits
- Schedule 6, Foreign Address and Third Party Designee
The information on Schedule 1, for example, roughly corresponds to lines 10-37 of the 2017 Form 1040, requesting, for example, business income, capital gain income, farm income, and rental income.
Schedules C, D, E, and F are referenced on the draft Schedule 1, which suggests that some version of these schedules will be retained for 2018. Schedule A is referenced on page two of the draft 1040, but Schedule B, Interest and Ordinary Dividends, is referenced nowhere. Neither is Schedule J, Income Averaging for Farmers or Schedule EIC (although the EIC is referenced on line 17a of the draft form).
Treasury Department Announcement
The Treasury Department has promoted the draft form by stating that “Families will be able to file taxes on a postcard-sized return.” Of course, no one will get postcard rates if they mail the form, since an envelope would be required. And with more than 90 percent of taxpayers filing electronically, the "postcard" seems a rather outdated symbol anyway.
More to Come!
During tax schools last year, we joked that we may get the promised “postcard” 1040, but it may be accompanied by a 50-page addendum. It appears that may be reality for some 2019 filers.
We’ll keep you posted as 2018 forms evolve and more details emerge.
For an in-depth review of the new provisions, check out this summary by Kristy Maitre.
The Center for Agricultural Law and Taxation does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. The Center's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.