With the simplification of the tax code brought about by the Tax Cuts and Jobs Act, the IRS is taking steps to revise Form 1040 into a simpler and shorter form.
Have a look at the draft of the streamlined IRS Form 1040
There are currently three versions of the 1040 — the standard form 1040, the 1040-A short form and the 1040-EZ for the simplest of tax situations. But the streamlining process will reduce it down to just one version.
Below is the current draft of what it may look like.
The draft of the new streamlined version is down to just 23 lines, from the 79 lines on the current 1040.
In addition, you’ll notice several other things missing that you’re used to from the traditional 1040 form.
For example, gone are line items for the personal exemption, alimony deduction, the deduction for moving expenses and a variety of other miscellaneous deductions.
It’s worth noting that many of the things that were removed from the draft of the 1040 were simply offloaded to one of six new schedules.
“For the most part, the new Form 1040 will contain all of the same information as the prior version but in a more condensed form,” Sara Gabrell, a CPA with metro Atlanta tax firm Value Added Inc., tells Clark.com. “For taxpayers with more complex returns, the IRS has added a series of Supplemental Schedules for reporting additional information.”
These schedules are currently in the draft process and haven’t been finalized yet, either. But here’s the basic outline of what you can expect:
- Schedule 1 – use this to report additional income or adjustments to income like IRA contributions, student loan interest, health savings account contributions, etc.
- Schedule 2 – use this for alternative minimum tax
- Schedule 3 – use this for nonrefundable tax credits such as child and dependent care expenses
- Schedule 4 – use this to report self-employment tax, uncollected Social Security and Medicare taxes
- Schedule 5 – use this to add up estimated tax payments or amounts paid with an extension
- Schedule 6 – use this to appoint a third-party designee to discuss your return with the IRS on your behalf
Remember, both the new schedules you’re seeing here and the streamlined 1040 are just drafts at this stage.
“These forms will likely change before a final version is released, so what you see today may very well be different than what you file at tax time,” Gabrell says.
The IRS is still working with members of the tax community to create final versions. Work on that is expected to wrap up by the end of summer.