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IRS Announces a Shrinking Form 1040 for Next Year

IRS Announces a Shrinking Form 1040 for Next Year
July 25, 2018 sdcdev
IRS Announces a Shrinking Form 1040 for Next Year

IRS tax forms just get longer and more detailed, don’t they? Just when we become proficient, it seems things become more complicated.

Well, not this time.

The IRS is cutting the form 1040 in half.

What?

Yes, you read right. The new version delivers on a promise to simplify the tax filing process. It’s about a page long, double sided.

 

Less Lines, Less Hassle

A postcard-sized tax form will replace the old 1040. Out with the wash also goes the 1040A and 1040EZ, shorter forms used by Americans with simpler tax situations. Next year, all taxpayers will use the same 1040 to file taxes.

The new form has 23 lines. That’s down by more than two thirds, from 79 lines. Lines eliminated include some types of income such as alimony, capital gains and rental real estate. Not everyone has these concerns. Taxpayers who earned that kind of income will now have to fill out an additional form.

Lines, such as the deduction for education expenses and the student loan interest deduction, have been moved to another form, too.

Have no fear. The information is still being collected. Joe Rosenberg, a senior research associate at the Tax Policy Center, a nonpartisan think tank, explains that the IRS essentially rearranged the lines using additional schedules.

The vast majority of taxpayers may not even notice a difference with the new form.

 

Good News for Tax Pros

More than 90% of filers use software or a tax preparer to file their taxes, which fill in the forms for them.

Look for an update on this. The IRS said it will seek input from the tax community and finalize the new version of the 1040 over the summer.

Note: Any time there’s a change from the IRS, you can expect a little confusion from some of your clients. Be ready with information, or better yet, offer it in advance. By providing information and offering services outside of tax preparation, you’ll gain the confidence of your clients and your business will grow organically.

 

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