The IRS has recently released an updated draft 2019 Form 1040, U.S. Individual Income Tax Return, with fewer schedules than the 2018 form. The draft of the widely-used return is the second major overhaul of the form in as many years, though the changes for 2019 are much less drastic than they were for the 2018 tax year. The IRS has also released a draft of new 2019 Form 1040-SR, U.S. Tax Return for Seniors, as required by the Bipartisan Budget Act of 2018 ( P.L. 115-123).
2018 Form 1040
The 2018 Form 1040 was revised from the longstanding version used in prior years following the mandate from President Trump, Treasury Secretary Steven Mnuchin, and other leaders that the form be shorter ( “postcard sized”) and simpler. The result was a smaller Form 1040 that could be used by any individual. The 2018 form had six new schedules, which applied to individuals with more complex tax situations, that could be filed with the Form 1040 as needed. The six 2018 Form 1040 schedules, and what they were used to report, are:
- Schedule 1 – Additional Income and Adjustments to Income ( “above-the-line deductions”);
- Schedule 2 – “Tax,” 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 – Other Payments and Refundable Credits; and
- Schedule 6 – Foreign Address and Third-Party Designee.
Draft 2019 Form 1040
The draft 2019 Form 1040 reduces the number of new schedules that may need to be filed from six to three. This is accomplished by drawing into the main Form 1040 the information from Schedule 6, and combining the other new schedules. The three draft schedules for the 2019 Form 1040, and what they are used to report, are:
- Draft Schedule 1 – Additional Income and Adjustments to Income (above-the-line deductions) (this schedule is generally unchanged, except for the renumbering of lines);
- Draft Schedule 2 – Additional Taxes (this schedule is the result of combining 2018 Schedules 2 and 4); and
- Draft Schedule 3 – Additional Credits and Payments (this schedule is the result of combining 2018 Schedules 3 and 5).
The resulting draft of the main 2019 Form 1040 is therefore slightly longer. 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.
New Draft 2019 Form 1040-SR
The Bipartisan Budget Act of 2018 directed the IRS to create a new simplified income tax return for individuals age 65 and older. The new form was to be similar to Form 1040EZ, but would not require the taxpayer to have taxable income of less than $100,000. Further, unlike the old 1040EZ, a senior would be able to use the new form even if his or her income for the year included:
- Social Security benefits;
- distributions from qualified retirement plans, annuities, or other similar deferred payment arrangements;
- interest and dividends; or
- capital gains and losses taken into account in determining adjusted net capital gain.
(The IRS discontinued Form 1040EZ when it redesigned Form 1040 for 2018.)
Like the draft 2019 Form 1040, the draft 2019 Form 1040-SR has two pages. Both forms have the same line numbers and similar boxes on the same page, and they share much of the same wording. There are a few key differences however, including:
- Draft 2019 Form 1040-SR is displayed in a large-size font, and each page nearly fills an entire side of an 8 1/2-by-11 inch sheet of paper.
- Draft 2019 Form 1040 has a smaller font, and each page fills just more than one-half of a sheet.
- Draft 2019 Form 1040-SR includes a “Standard Deduction Chart” on page 1, that lists 15 possible dollar amounts for the standard deduction. The amounts are based on the taxpayer’s filing status and the number of boxes checked in the “Age/Blindness” section of Standard Deduction on page 1. A taxpayer must use the form instructions to determine the standard deduction amount, and cannot use the chart, if someone can claim the taxpayer (or his or her spouse if filing jointly) as a dependent, if the taxpayer’s spouse itemizes on a separate return, or if the taxpayer was a dual-status alien.
- Draft 2019 Form 1040 lists only three possible standard deduction amounts to the left of line 9. A taxpayer who checks any box under Standard Deduction on page 1 must use the form instructions to determine the standard deduction amount.