If you struggle to complete your federal tax return next year, the new Form 1040 may be part of your problem. With new standard deduction amounts, the elimination of personal and dependent exemptions, and new supplemental schedules, the form might take some getting used to.
Thanks to the Tax Cuts and Jobs Act-related tax form overhaul, you'll need to familiarize yourself with the 2019 version of the 1040 form. It's shorter and less complicated than its predecessor, so it isn't a weekend killer. But if you start completing Form 1040 and a related schedule, and begin feeling a little lost, you might need some clarification.
Read More: Form 1040: What's Changed for Your 2019 Tax Return
Forms 1040, 1040A and 1040EZ
In 2017, as the Tax Cuts and Jobs Act (TCJA) was signed into law, forms 1040, 1040A, and 1040EZ were consolidated into the new Form 1040. Today, the use of the 1040A, 1040EZ, and the original 1040 forms is restricted to revising prior returns or paying taxes for a prior tax year.
Understanding Form 1040
The majority of Americans use the federal income tax Form 1040 to file a return with the Internal Revenue Service (IRS). It's here that you document your income, tax deductions or tax credits as well as the tax you owe or the amount of tax you paid that should be refunded.
Taxpayers with straightforward tax situations will complete their filing obligations using the new Form 1040 alone without accompanying schedules. But if you have certain types of income or deductions, you will have to attach schedules such as Schedule A for itemized deductions, Schedule B for interest and ordinary dividends, and Schedule D for capital gains and losses.
Exploring Form 1040 Changes
The 2019 Form 1040 reflects some changes of which you should be aware, including:
- Tax exemptions: Historically, a taxpayer claimed certain exemptions, which lowered the person's tax liability. Today, these exemptions aren't available.
- Standard deductions: A taxpayer's option to take a standard deduction or itemize deductions remains. The standard deduction, however, has increased almost 100 percent from the pre-TCJA amount.
- Alimony: For any alimony agreement that's filed with the courts after January 1, 2019, the alimony is no longer deductible in terms of taxes for the payer. Nor is it included in the recipient's income.
- Cryptocurrency: To complete Form 1040, you must state whether you received, sold, sent, exchanged, or in some other way acquired a financial interest in virtual currency. Take care when answering the question because if you provide a false answer, you're subject to penalties of perjury.
Read More: Are There Different Types of Form 1040?
Looking Into Other 1040 Forms
Form 1040-SR is a senior citizen-specific form that anyone 65 years of age or older can complete and benefit from the larger font size. If the senior's tax situation is a complex one, the person must instead use Form 1040.
The IRS makes available still other types of 1040 forms for specific situations such as Form 1040-C for departing aliens, Form 1040-NR for nonresident aliens, and Form 1040-X to file an amended return.
Considering Filing Electronically
If you file your taxes electronically, you might not even notice any changes because the tax return preparation software will automatically use your answers to the tax questions to complete the new Form 1040 and any needed schedules. Tax software can be a convenient, secure, and accurate way to file your return.
- IRS.gov: About Form 1040, U.S. Individual Income Tax Return
- Tax Foundation: The Tax Cuts and Jobs Act Simplified the Tax Filing Process for Millions of Households
- IRS.gov: About Form 1040-A, U.S. Individual Income Tax Return
- IRS.gov: About Form 1040-EZ, Income Tax Return for Single and Joint Filers With No Dependents
- IRS.gov: Form 1040
- IRS.gov: IRS Provides Tax Inflation Adjustments for Tax Year 2020
- IRS.gov: Topic No. 452 Alimony and Separate Maintenance
- Forbes: The IRS Is Adding a Cryptocurrency Question to Form 1040 for 2020/
- IRS.gov: Form 1040-SR
- eFile: Tax Forms and Schedules for 2020
- IRS.gov: Forms and Publications
- IRS.gov: Here Are Five Facts About the New Form 1040
- Internal Revenue Service. "About Form 1040-A, U.S. Individual Income Tax Return." Accessed June 25, 2020.
- Internal Revenue Service. "1040A Instructions 2017," Page 13. Accessed June 25, 2020.
- U.S. Senate Committe on Health, Education, Labor & Pensions. "FAFSA Simplification Act of 2019." Accessed June 25, 2020.
- Internal Revenue Service. "1040 and 1040-SR Instructions Tax Year 2019," Page 6. Accessed June 25, 2020.
- Internal Revenue Service. "1040 and 1040-SR Instructions Tax Year 2019," Page 3. Accessed June 25, 2020.
Billie Nordmeyer is an IT consultant of 25 years standing. As a senior technical consultant for SAP America and Deloitte Touche DRT Systems, a business analyst, senior staff, and independent consultant, Billie has worked across the retail, oil and gas, pharmaceutical, aeronautics and banking industries. Billie holds a BSBA accounting, MBA finance, MA international management as well as the Business Analyst and Software Project Management certificates from the Cockrell School of Engineering at the University of Texas at Austin.